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Home Corporate finance

Google’s Fitbit Acquisition Might Not Close This Year

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October 18, 2020
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Fitbit (NYSE: FIT) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google have been hoping to shut the $2.1 billion acquisition of the wearable gadget maker this yr, however which may not occur. Initially introduced in November 2019, Google and Fitbit have been making an attempt ever since to handle antitrust issues with the intention to safe regulatory approval.

“The period of regulatory approvals can’t be foreseen with certainty,” Fitbit wrote in its most up-to-date quarterly submitting. “Whereas the Merger is predicted to shut in 2020, the time-frame could prolong past that.”

Person on a boat looking at Fitbit sense on their wrist

Fitbit Sense. Picture supply: Fitbit.

The acquisition has confronted specific opposition within the European Union, the place shopper information safety rules are much more stringent than within the U.S. The tech companies may need to attend till 2021 to seal the deal.

Delaying till the brand new yr

Reuters studies that the European Fee has prolonged the deadline to its ongoing investigation from Dec. 23 to Jan. 8, doubtlessly as a result of Google and Fitbit requested extra time. Google has been formalizing its commitments to regulators to not leverage delicate consumer well being information for ad-targeting functions, arguing that the deal is primarily about units and {hardware} as a substitute of information.

Antitrust regulators usually solicit enter from rival corporations as a part of a majority of these investigations to assist gauge the potential influence of an acquisition on competitors. Many opponents strongly oppose the deal, believing that the commitments round information are inadequate, in line with a current report from The Monetary Instances.

The competing corporations — together with Garmin and Samsung, amongst others — concern that Google will be capable of create a monopoly available in the market for wearable units and say that Google wants larger exterior oversight as a substitute of the self-regulation mechanism that it has put ahead.

Google cannot create a monopoly with 3% market share

Whereas the privateness issues round consumer information are fairly legitimate given Google is without doubt one of the largest promoting corporations on the planet, the monopoly fears aren’t.

Apple (NASDAQ: AAPL) completely dominates the wearables house with Apple Watch and AirPods. The Mac maker extended its leadership within the second quarter, with complete items leaping 25% to seize 34% worldwide market share. In the meantime, Fitbit’s volumes sank by practically 30% and had lower than 3% market share. Fitbit used to promote its Flyer wi-fi headphones which may have certified as a hearable device, however has since discontinued the product, presumably on account of poor gross sales.

Google, which isn’t actually related within the wearables market at present on account of producers abandoning Put on OS, argues that the Fitbit acquisition will really bolster competitors within the wearables market.

“The wearables house is very crowded, and we consider the mix of Google’s and Fitbit’s {hardware} efforts will improve competitors within the sector, benefiting customers and making the following technology of units higher and extra reasonably priced,” the search juggernaut has stated.

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Suzanne Frey, an government at Alphabet, is a member of The Motley Idiot’s board of administrators. Evan Niu, CFA owns shares of Apple. The Motley Idiot owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Fitbit. The Motley Idiot has a disclosure policy.

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