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Google’s $2.1B Fitbit deal faces EU antitrust probe

The European Union opened an antitrust probe into Google's $2.1 billion Fitbit deal. Yahoo Finance's On The Move panel discusses.

Video Transcript

JULIE HYMAN: What may not work out well is what melody is watching. And that is Google's acquisition of Fitbit, because it is undergoing some regulatory scrutiny in Australia and now in Europe.

MELODY HAHM: Yeah. Unsurprisingly, Julie, you could say that European Commission is launching a full-on investigation into the potential acquisition of Fitbit by Google-- of course, that was announced in November of 2019-- for $2.1 billion. And it is a stark contrast from even Pinterest, right? Fitbit was a splashy unicorn. Fitbit, a lot of people were wondering when it would go public, when that potential acquisition would happen.

And it had fallen to fifth place in the wearable space by November of last year when it had previously been number one. And then, of course, Apple, Huawei, Samsung all kind of took over. So from their perspective, they were saying, this is not competitive at all. We're actually an underdog in the same way that Facebook's Mark Zuckerberg was sort of arguing during the antitrust hearings last week.

I do have to say this is some serious concern for investors out there because, you know, at least in the US, there is a congressional investigation that is taking place. But the US is a lot easier, as we have noted, when it comes to these sorts of deals happening. Although given all of this pent-up pressure and demand facing the big four tech companies, I do imagine that this would just be another sort of reason for people to be wary of Google.

I want to point out that Google itself has promised to silo the personal privacy data from Fitbit users from all that tracking information, and that they wouldn't actually use it for advertising. However, the EU commissioner as well as a lot of the Australian investigators are saying, hey, that is a very empty promise by many measures.

Especially as we saw the Jeff Bezoses of last week saying, yeah, we have these policy, but we won't claim that we haven't broken that rule that we have set ourselves. So I do think there is reason to be concerned and for investigators to look at this very closely.

JULIE HYMAN: Right. I mean, I would say judging how Fitbit is trading, it's down about a half a percent today. It doesn't seem as though investors think there's any real threat to the deal eventually getting done. I guess it's just a question of what kind of parameters regulators or what kind of extra reassurances regulators might want from Google.

MELODY HAHM: Yeah. I think as the EU folks pointed out, the more sensitive and specific the data, of course, the bigger the risk that it will give to competitive problems. So when you think about it, health data is some of our most private and some of our most secure data in many ways.

Unfortunately, I do feel as though a company like Google, as much as they are pledging that-- a piece of that, I think right now the calculation is like 70% of that sort of privacy data they are claiming will not be used to advertising measures. It has to be 100%, right, from the minds of regulators.

So I do not know if they'll be able to come to that sort of a compromise. But given this environment and this ambiance where consumers are demanding those sorts of measures, it would be in Google's best interest, I think, to kind of own up to that.

JULIE HYMAN: Yeah. Well, Google shares incidentally are down a little more than 1% today.