On November 1st, Google announced that it signed an agreement to acquire Fitbit. Paying $2.1 billion, Google is now expanding its tech company into the health industry. Their aim is to “introduce Made by Google wearable devices” much like the Apple Watch. Google plans on aligning with Fitbit’s goal of wellness and active lives by also protecting their right to privacy and security.
One concern this sale raises is that Fitbit is one of the small device companies that have had to be sold to the biggest companies in order to continue. Some others are Nest, Beats, Dropcam and Flip. Apple might’ve contributed to Fitbit’s decline with the release of the Apple Watch and its health features. Although Fitbit made their devices offering the same capabilities or even more as Apple did, Apple Watch dominated the market (38% share in the second quarter). Fitbit had a mere 24.1%. In 2018, Fitbit’s revenue was $1.5 billion which was down 6% from the year before. Its Versa Lite device didn’t gain much attention or sales either.
However, the biggest concern with Google owning Fitbit is the private health information about its users. A statement was made by Rich Osterloh, the senior vice president of devices and services, emphasizes: “we will be transparent about the data we collect and why. We will never sell personal information to anyone. Fitbit health and wellness data will not be used for Google ads”. The acquirement of this data would not only give Google insights to the health data but also their parent company Alphabet. Alphabet has a wide range of health care initiatives such as Verily, which is working to improve blood sugar measuring devices and smart lenses. If Google were to use this data, it would not be the first time that a company owned by Alphabet would violate privacy. In 2017, Deepmind (London based A.I. lab owned by Alphabet) gained access to medical records and processed the records to Google. As we read in the article, Google has already been investigated for antitrust concerns and the news has agencies already investigating them. Google will have to pay Fitbit $250 million breakup fee if their deal does not have antitrust approval.
To me, Google’s purchase of Fitbit seems like an attempt to become the top competitor in the tech industry. Instead of trying to become another competitor with Fitbit and Apple Watch, Google’s solution is to simply buy the competitor. Google has always been an afterthought compared to Apple products and even with multiple products like smartphones, tablets, laptops, smoke detectors, thermostats (Nest) and speakers, they have not gained recognition as a hardware company. Google’s acquirement of Fitbit makes Google a more recognized brand and a close competitor to Apple.
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This seems like another case of the common pattern of oligopoly behavior matching. It's a bit different from other cases of this behavior, since Google isn't changing their prices in response to Apple's decision. However, this does mean that these companies are very interested in following each other to remain competitive in all possible markets. However, this pattern is especially problematic with consumer data, since selling that data online gives whoever is selling it a leg up against the other competitors. This means that companies are compelled to follow this pattern of data selling to stay in competition, further eroding customer privacy.
ReplyDeleteI agree that through Fitbit, Google is more greatly recognized and there is even more nonprice competition between Apple and Google, because these companies have similar but differentiated products. Nonprice competition is what makes them so competitive, and the expansion of Google perhaps brought them to a higher position relative to its original position compared to Apple.
ReplyDeleteIt makes sense given their financial endorsements and pure market power that they would eliminate competition by simply buying the competitor. If they have the means and financial stability to take over another company, then it makes sense - especially if they're looking for more recognition and competition with other industrial giants. However, I do see how this can be a problem and provide an unfair advantage to those that are already well-established in their industry. This doesn't allow for smaller businesses to expand.
ReplyDeleteThis provides more insight upon the role big data has to play in the technological market. The acquirement of data equates to control over consumer utility, which is not only a monopoly of a single industry, but rather a monopoly over the consumers themselves. This is extremely dangerous and demonstrates the negative externalities which are produced through the advancement of technology.
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