Google’s goal to acquire Fitbit could have the company facing a $400 million dollar fine according to The Guardian. Google faces a $400 million dollar fine if it takes over Fitbit before the Australian competition regulator completes an investigation into the transaction.
The Australian Competition and Consumer Commission (ACCC) today rejected Google’s offer to enter into a court-enforceable undertaking. This undertaking limits the way Google would use data it receives by taking over Fitbit. Fitbit’s fitness trackers track users' health data as we all know.
Rod Sims, the ACCC chair, says they will wait until March 25 to make a decision. The ACCC will continue to investigate everything surrounding the transaction. Google and Fitbit came to an agreement where Google would pay $2.1 billion dollars for Fitbit. The deal will be completed using both cash and acquisitions. This gives Google access to 27 million users and the data associated with their health trackers.
Last week the European Union (EU) took Google’s offer of a court-enforceable undertaking. However, the EU is on the same page as the US Department of Justice in regard to the concerns of this acquisition. Despite the EU accepting Google’s offer, the ACCC’s decision puts it at odds with the EU.
Google faces a $400 million dollar fine cause of ACCC worries
The ACCC worries Google will harm competitors by making it harder for them to interface with Android devices. This is called “vertical foreclosure.” If Google were to do this it would make it harder for companies like Samsung, Huawei, and OnePlus’s wearable endeavors.
The ACCC is essentially trying to ensure that a duopoly does not form in the wearables market. Apple already has a tight hold on wearable integration with iOS. Consequently, if Google is allowed to do the same then the market comes down to Apple and Android. Just like the smartphone market.
The ACCC has a couple of tricks up its sleeve they can use. If the US Dept. of Justice approves the deal without the ACCC’s approval then they will try to block the deal. If the ACCC cannot block the deal it will bring forth legal action focusing on breach of competition law. The $400 million dollar fine comes from 10% of Google’s estimated Australian turnover. This is around $4 billion a year.
Google says they will continue cooperating with the ACCC. Although, the search giant is disappointed they have no plan to not answer any questions the ACCC has. Google says that the deal is and has always been about devices. Not about the data. They also say they are committed to protecting Fitbit users.
Google along with its fellow tech giants have been under a microscope for the entirety of 2020. With great power comes great responsibility. As a result governments around the world are keeping power in check.