On the 22nd of December 2020 South African Competition Commission has released a statement that confirms it as conditionally approved the proposed merger in which Google intends to acquire Fitbit. This merger is also being declared to and reviewed by competition commissions in several jurisdictions, including the EU, USA, Australia, Canada and Japan.
Google encompasses a wide range of business activities, including online search, online advertising, other online and cloud computing services, and the Android ecosystem.
Google's business activity in South Africa relates to the provision of local support and marketing services internally. Google does not sell any wearable devices or hardware in South Africa - services relevant to this transaction are Wear OS, Google Fit, The Play Store, Google Search and Google Ads.
Fitbit develops, manufactures and distributes wrist-worn wearable devices, smart scales and software. The main Fitbit products available in South Africa are fitness trackers, smartwatches and the Fitbit mobile app.
The Commission found that the proposed transaction is likely to result in a substantial prevention or lessening of competition. The Commission was concerned that as a direct result of the proposed merger, Google might:
Exclude Fitbit's competitors in the market for wrist-worn wearable devices, as the merger might significantly alter the market structure for the supply of wrist-worn wearable devices in South Africa and increase entry barriers for potential entrants in the market.
Entrench its dominance in the online advertising and online search market through utilising the newly acquired database maintained by Fitbit, as it might provide an essential advantage in online advertising markets to Google.
The Commission was also concerned that, as a direct result of the proposed merger, Google would be able to use Fitbit's health data to enter the digital health market or other health services markets and exclude other players and potential entrants in the market by restricting access to health Fitbit health data.
To alleviate all these concerns, Google has tendered the following conditions, that have to be maintained for ten years and are in line with what is offered in other jurisdictions.
Google committed to making access to the Android OS available, without charge for entry and on a non-discriminatory basis, under the same license terms and conditions that currently apply, to all competing manufacturers of wrist-worn wearable devices.
Furthermore, Google committed to maintaining Data Separation between the Fitbit data and Google's existing data and not using any Measured Body Data or Health and Fitness Activity Location Data from Fitbit for, Google Ads. Also, Google must present each South African User the choice to grant or deny use by Other Google Services (excluding Google Ads) of any Measured Body Data stored in their Google Account or Fitbit Account.
Google will allow third parties that currently access Fitbit's data to continue to access users' health and fitness data through the Fitbit without charging for access and subject to user consent.
"This merger affirms the need for regulatory interventions in digital markets. Regulatory authorities need to look closely at mergers and acquisitions in these rapidly changing markets, particularly when large global technology firms that operate across multiple jurisdictions are involved. The remedies we have agreed to ensure that the transaction does not raise barriers to new entrants in the wearable technology and nascent health data markets. In that way, we would be assured of inclusive growth and equal distribution of wealth in rapidly growing digital markets," says Competition Commissioner Tembinkosi Bonakele.