Markets

Google's Fitbit Acquisition Might Not Close This Year

Fitbit (NYSE: FIT) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary Google have been hoping to close the $2.1 billion acquisition of the wearable gadget maker this year, but that might not happen. Initially announced in November 2019, Google and Fitbit have been trying ever since to address antitrust concerns in order to secure regulatory approval.

"The duration of regulatory approvals cannot be foreseen with certainty," Fitbit wrote in its most recent quarterly filing. "While the Merger is expected to close in 2020, the time frame may extend beyond that."

Person on a boat looking at Fitbit sense on their wrist

Fitbit Sense. Image source: Fitbit.

The acquisition has faced particular opposition in the European Union, where consumer data protection regulations are far more stringent than in the U.S. The tech companies might have to wait until 2021 to seal the deal.

Delaying until the new year

Reuters reports that the European Commission has extended the deadline to its ongoing investigation from Dec. 23 to Jan. 8, potentially because Google and Fitbit requested more time. Google has been formalizing its commitments to regulators not to leverage sensitive user health data for ad-targeting purposes, arguing that the deal is primarily about devices and hardware instead of data.

Antitrust regulators often solicit input from rival companies as part of these types of investigations to help gauge the potential impact of an acquisition on competition. Many competitors strongly oppose the deal, believing that the commitments around data are insufficient, according to a recent report from The Financial Times.

The competing companies -- including Garmin and Samsung, among others -- fear that Google will be able to create a monopoly in the market for wearable devices and say that Google needs greater external oversight instead of the self-regulation mechanism that it has put forward.

Google can't create a monopoly with 3% market share

While the privacy concerns around user data are quite valid given Google is one of the largest advertising companies on the planet, the monopoly fears aren't.

Apple (NASDAQ: AAPL) utterly dominates the wearables space with Apple Watch and AirPods. The Mac maker extended its leadership in the second quarter, with total units jumping 25% to grab 34% worldwide market share. Meanwhile, Fitbit's volumes sank by nearly 30% and had less than 3% market share. Fitbit used to sell its Flyer wireless headphones that might have qualified as a hearable device, but has since discontinued the product, presumably due to poor sales.

Google, which is not really relevant in the wearables market currently due to manufacturers abandoning Wear OS, argues that the Fitbit acquisition will actually bolster competition in the wearables market.

"The wearables space is highly crowded, and we believe the combination of Google's and Fitbit's hardware efforts will increase competition in the sector, benefiting consumers and making the next generation of devices better and more affordable," the search juggernaut has said.

10 stocks we like better than Alphabet (C shares)
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Alphabet (C shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 24, 2020

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, and Fitbit. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

GOOG AAPL GOOGL

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More