It’s been 11 months since Alphabetit’s ( GOOG 0.15% ) ( GOOGLE 0.07% ) Google announced a whim $2.1 billion contract buy pioneer clothes Fitbit ( ADJUST ). The deal is taking much longer to close than most buyouts, largely due to fears regulators have about all the health and tracking data Fitbit collects falling into the hands of a tech giant. technology.
The deal is now unlikely to close in 2020, as Alphabet and Fitbit initially hoped, but the pair aren’t dead yet. Bloomberg reports that Google is offering a data pledge and other concessions in a bid to get the often stingy European Union to approve the acquisition.
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The market has not been persuaded that this deal will happen. As of Monday’s close, Fitbit shares were priced just over 10% off the $7.35 cash Alphabet agreed to pay for each share late last year. . Shares opened higher on Tuesday morning news, but that’s still a surprisingly wide spread for an all-cash deal that could close soon, given Google’s latest concessions.
Google knew it had an uphill approval battle – both with the EU and in the US – when the deal was initially announced. He earlier pledged to separate data collected from Fitbit and Google, promising not to use Fitbit data to target Google ads. But the EU was still concerned about how Google would deal with rival trackers’ wristbands and fitness apps.
The new and improved Pledge underscores Google’s commitment to continue supporting other handheld Android platforms. It also shows promise in allowing Fitbit users to stay connected to third-party services.
The sad irony here is that while Alphabet and Fitbit are trying to woo regulatory agencies, its tech rivals have only stepped up their presence in wearables. Earlier this month, Apple (AAPL 0.37% ) introduced its latest wearable Apple Watch. This too launched the Apple Fitness+ platform. Meanwhile, Amazon ( AMZN 0.69% ) also launches his group in the ring. The world’s largest online retailer launched Halo this month, a health, fitness and sleep tracking wristband that is clearly aimed at the Fitbit market.
The regulatory deadlock is pretty ridiculous at this point. While some are worried about what Google will do with Fitbit in its arsenal, two of its colleagues FAANG Shares have taken an organic approach where they can decide how they will use the data they collect from their proprietary devices. It’s surprising that Alphabet isn’t just swallowing the $250 million termination fee it owes Fitbit if the deal falls through and is following Apple and Amazon in rolling out its own hardware. And that’s probably what he will do if his concessions aren’t enough this time.
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