Google/Fitbit Will Monetise Health Data and Harm Consumers

September 2020

Google/Fitbit will monetise health data and harm consumers

Marc Bourreau, Cristina Caffarra, Zhijun Chen, Chongwoo Choe, Gregory S. Crawford, Tomaso Duso, Christos Genakos, Paul Heidhues, Martin Peitz, Thomas Rønde, Monika Schnitzer, Nicolas Schutz, Michelle Sovinsky, Giancarlo Spagnolo, Otto Toivanen, Tommaso Valletti and Thibaud Vergé

The European Commission (alongside other regulators) is conducting an in-depth investigation of the Google/Fitbit deal. A static, conventional view would suggest limited issues from a merger of complements. Yet unprecedented concerns arise when one sees that allowing for Fitbit’s data gathering capabilities to be put in Google’s hands creates major risks of “platform envelopment,” extension of monopoly power and consumer exploitation. “Health tech” is a major growth area, and the combination of Fitbit’s health data with Google’s other data creates unique opportunities for discrimination and exploitation of consumers in healthcare, health insurance and other sensitive areas, with major implications for privacy too. And as wearables are becoming a “point of access” to our “attention,” we need to worry about incentives to pre-empt competition that could threaten Google’s data collection dominance. As the consensus is now firmly that preventing bad mergers is a key tool for competition policy vis-a- vis acquisitive digital platforms, the European Commission and other authorities should be very sceptical of this deal, and realistic about their limited ability to design, impose and monitor appropriate remedies.

GOOGLE’S MISSION IS TO MONETISE THE WORLD’S DATA – AND HEALTH DATA IS EXCEPTIONALLY MONETISABLE, IN WAYS THAT CAN DIRECTLY HARM CONSUMERS

Google advertises its mission as “to organise the world’s information and make it universally accessible and useful” – but its business practices of the last decade suggest a more accurate statement: “to monetise the world’s data.”

Google’s “playbook” is by now well understood. Its history of systematic acquisitions across a vast “chessboard” of disparate activities, bolted onto its original Search behemoth, are unified by a common aim: to enhance and protect its unique data empire, and enable its monetisation in ever-expanding applications. YouTube was acquired and, like Search, offered for free to consumers to be monetised by selling “audiences” to advertisers. Android was acquired and then offered for free to

CEPR POLICY INSIGHT No. INSIGHT POLICY 107 CEPR developers and handset manufacturers as part of a strategy to build the “bridge” CEPR POLICY INSIGHT No. 107 September 2020 2 vulnerable ( vulnerable and theweak that hurt example, for scams, financial facilitating roleGoogle’s in around concerns known are There markets. potential many into data in strength its leverage to record track and ability, incentive, the has Google and applications more possible many has But data such markets. advertising openly, online in very and done (very has profitably) Google fortime, some power, something is discriminatory its flexing and input, ageneral-purpose as data this Exploiting data. of other wealth valuable complementary health metrics of asource as wearable the –but in only Fitbit’s itself not in is wearable deal this in of Google The interest most. us concerns of Fitbit that acquisition proposed of the data unmatched Google’s by supported power, discriminatory This dominance. existing its protect to and markets adjacent offerings targeted product enabling by also increasingly and advertising of personalisation through consumers of harming capable multiple markets, across present monopolist of a“discriminating” that is essence power: its market “ordinary” just not yield does dominance Google’s monopolists, traditional Unlike both. from value extract and for audiences, accept to publishers’ willingness other pay and to willingness advertisers’ infer can Google stack, tech ad of sides the on all it operates bidder. highest because the to them And auction to and locations, and interests demographics, to up them according carve to Google allows audiences these about data unparalleled to access controlling growth area where personalised offers often do not often offers personalised where area growth enormous an is tech” “Health services). related and services, medical insurance, life and (health field tech” of applications “health attractive fabulously the in possible as strong as be to itself position to major strides made has Google that sign every is There Europe. of fabric social the employees endangers as of users vulnerability increased an welfare, efficient or benign below, not absolutely argue we as and, incomparable is that even andemployment, health, insurance, as such fields in of offers for personalisation allows data other and health combining particular, In andrisk. put employees at consumers exploit profitably to advantage informational amassive using around awhole of level new concern adds assets data existing its with Shopping to adtech). to Shopping to (from others Android into one market from leveraging of proven anticompetitive record atrack involved also has strategy well) the know authorities competition the And competition. (as throttling 2011):while al. consumers to convenience offering et envelopment” (Eisenmann –“platform for this aterm is There exploitation. and analysis, data collection, of data mission its facilitating functionalities complementary multiple involving agencies, of competition radar under the mostly of others, dozens made has Google acquisitions, high-profile these to addition In intermediation. ad monopoly in current Google’s sealed AdMob and of Doubleclick The acquisitions target better to data location and interest, demographic, consumer it was it was etc.), Chrome, News, Maps, (Gmail, Calendar, services “free” of popular suite Google’s mobile. Like to desktop monopoly the from of search Google’s shift the enabled that 2 1 access to vast audiences allows Google to charge higher advertising prices; advertising higher charge to Google allows audiences vast to access controlling CMA, by the documented As multiple aspects. has of data Monetisation that they earn a return on capital in excess of40%. earnareturnoncapitalinexcess that they commandspricesforsearch keywords that 30-40%higherthanthat Google earnedby Bing, and CMA (2020)reports European Commission(2017,See 2018), CMA(2020)andmultiple others. not monetised monetised Financial Times Financial 1

directly , accompanied by a record of leveraging its power both into into both power its of leveraging by arecord , accompanied , 2020a). Gathering through the sale of ads, but through the collection of collection the but through of ads, sale the through which Google can correlate with an enormous enormous an with correlate can Google which . Looking beyond narrow consumer consumer narrow beyond Looking . health data mean primarily “lower prices” to to prices” “lower primarily mean that can be interacted interacted be can that , is the dimension dimension the , is the sale of ads. of ads. sale the 2 and and CEPR POLICY INSIGHT No. 107 September 2020 3 consumer harm). This is a key chapter of “playbook”. Google’s chapter akey is harm). This consumer (and ultimately choice for advertisers less (in and search) for rivals value less mean would also This advertising. search in them from value further extract to Google would enable and for instance, advertising, targeted in suppliers interested product or health pharmaceutical to and/or valuable be rate well could patterns) sleep heart advertising markets online in position dominant already Google’s cements further this if data non-health Google’s with of Fitbit’s combination the about health should we worry course Of do so. to “not” undertaking an accept it could purposes, Fitbit for advertising from gathered data of health use the about concern apossible was there extent the to that matter of this 1review Phase end EC the at of the conceded Google press, the in reported widely As ADVERTISINGONLINE IN OBVIOUS MOST THE HARM” BEYOND “THEORY OF TO LOOK NEED merger. of aGoogle/Fitbit evaluation the to relevant is that direct both view our in is kind of this exploitation for consumer prospect the And of dominance. abuse exploitative good candidates, but higher prices and – critically – lower cover to others. –lower to cover –critically and but prices higher candidates, good 3 be used forever used be may by them collected data the implies product of aGoogle use the that understood poorly it or was if consumers, on to £500/household at passed are CMA UK) the in by the (estimated advertising exclusions), of digital costs the if insurance scams, not free”. are They are Android and Chrome and say “Gmail to wrong It plain just is harm. consumer more to lead may and remedy adequate not obligation an is access adata that means also This of consumers. detriment the –to data such analyse to capabilities comparable simply do haveremotely not rivals because but options, hidden privacy better offer to merger-specific are harms Such harms. economic further suggest and literature, economics behavioural the in “hidden prices” to analogous today) are Google by used maybe ago years five given how data knowing (like characteristics privacy unknown Furthermore, services). historical (including the services of “free” Google’s for use the consumers to increase price aquality-adjusted –wouldrepresent pursue wouldinevitably Google –which used and data, other with paired shared, is data way the in know. Changes do over when it they control even have limited and used is don’t data how their know consumers that is The reality pick up ball. the will regulators away privacy hoping that look just cannot we and issues, power market with connected intimately here are issues but privacy limitations, have known GDPR rules concerns. our amplify issues Privacy bottleneck. Android its ways various in by exploiting compete to of others hobblingFitbit ability the and from gathered that with data existing its combining uniquely space, this in dominant becoming of Google prospect the is us today. concerning happening But is what already markets, withsimilar concernsarisinginotherapplications.markets, In ofhealthinsurance addition todirect consumer harm,thishasthepotentialtosignificantly harmthefunctioning options whosecoverage fortheconsumer(Day andNadash, medicalconditionslikely exempts tobeimportant 2012). would have an incentive touseitssuperiorknowledgeGoogle tosellorenableotherssecretlydegraded insurance Furthermore, acknowledging that consumershave limitedattention orability toforesee future medicalconditions, free if they permit the targeting of negative goods (addictive products, financial financial products, (addictive goods of negative targeting the permit they if free for any for . Correlating such data (e.g. demographics and/or interests with (e.g. with data such and/or demographics interests . Correlating use whatsoever. These data practices can already be seen as an an as seen be already can practices data These whatsoever. use consumer harm and implies future competitive harm harm competitive future implies and harm consumer not because rivals will necessarily have the incentive incentive have the necessarily will rivals not because use of their of their use 3 This is is This CEPR POLICY INSIGHT No. 107 September 2020 4 predicted to be a major area of growth in the future. the in of growth amajor be area to predicted is andthat one a $100 offers) business already billion is personalise and outcomes health topredict data health and user profiles of the basis on discriminate finely to AI (the tech” and of data use “health that appreciation an be to needs point The starting of). aware not not even indeed are and do to not consent they ways in data the by using service of the quality the in areduction to them exposing to (in them addition from surplus by extracting consumers exploiting directly and compete, to ability their undermining by markets these in rivals potential (among and markets others), of actual foreclosure insurance and in powerhealth additional of thecreation is merger-specific) is (which Google). (or The harm it with users share their to them from force data use to ability their restrict that on terms contingent Android to access their by making – smartphones users’ to wearable the for tethering require manufacturers wearable –which system operating Android over the control Google’s data); leverage and device and data health (both collection data enhance to means)other as so and tying and (through pricing of Fitbit adoption over wearables the other expand to markets insurance and health into power its leverage to order in so, do to of rivals ability the undermine and data, health exploit and gather to ability its strengthen will that conduct implement to Google it enables that way the is deal this around concern The essential GREATER EVEN OF ARE HARM OF OTHER THEORIES CONCERN player in health and insurance. and player health in a major as itself position to multiple steps taken already has which on lost Google, not been certainly has applications of these potential The enormous future. for this positioning and investing in involved all providers, analytics of health range alarge and manufacturers wearable multiple significant outside are of Apple’s there ecosystem) (i.e. “Android in space” present, At commands. voice-activated incorporating and bigger becoming screens music –with to maps –from apps non-health featuring increasingly also Wearables are analysed. be cloud the sent it on where can there to from and smartphones, app on users’ an to related then is that signals of health-related stream of a constant a generator is A wearable it accordingly. price and risk identify to them enable that insurers and providers health to analytics sophisticated by selling made 6 5 4 But But theories: theories: potential We three all. see us touches which area an into data critical and on sensitive advantages other Google’s given not retrievable are that ways in substantial lessening of competition (SLC) in online advertising markets. advertising (SLC) of online competition in lessening substantial a and discriminate, to ability due greater to advertisers to prices higher consumers, to privacy/quality reduced from 2019;al., 2020). harm al., et Acemoglu direct implies This possibilities)for all (and targeting ad thus outcomes health predict then to data, their of not using some opt did use out from that of Fitbit users for asubset even outcomes non-health with outcomes health aggregate externalities due privacy to data: personal not on rely individual/ need predictions record, track Google’s given monitored, be even could how apromise such aside Leaving event. any in harm potential away all See Appendix B in Chen et al.(2020). et Appendix BinChen See three andthat thiswillgrowto70%inthenext years. underwriting showthere, that 50% ofinsurancehealth care. almost forexample, providersalready They useBDA forpricing and ofBigData Analytics (BDA) al.(2020)foraconcisesummary andpersonalisation et in AppendixCinChen See power.level ofmarket exercise existing efficient ofan Note isanincrease power, theSLC inmarket are that two thelast distinct: effects andthediscrimination isamore note : a promise by Google “not to use Fitbit data for advertising” would not conjure for advertising” Fitbit data use “not to by Google : apromise . This involves various combinations of strategies that are intended intended are that of strategies combinations various involves . This 6 This deal has the potential to tip the scale in its favour favour its in scale the tip to potential the has deal This non-Fitbit users (billions of them) (Choi non-Fitbit (billions users et , it is enough for Google to correlate correlate to enough, it for is Google 5 There is enormous money to be be to money enormous is There , and extend its hold its extend , and general mobile mobile general 4

CEPR POLICY INSIGHT No. 107 September 2020 5 and direct customer harm from discrimination. This can be also purposed as an SLC SLC an as purposed also be can This discrimination. from harm customer direct and reductions quality increases, price cause will applications data health into dominance data non-health its leverage to Google allowing has; Google that data non-health the none has that in footing equivalent now on a roughly are Wearables providers encourage concentration in the long run (as is likely the case in big data applications). big in data case (as the long the likely in is run concentration encourage that factors have any themselves applications data health if particularly durable, is advantage data non-health Google’s as SLC by an reinforced wouldbe harm consumer direct This surplus. consumers’ extract just it will markets; these in consumers to not will markets (data) insurance into monopolist discriminating of a dominant the entry Instead, benefits. competitive imagine could we then basis, that on competed held firms and widely were by Google controlled that like data if markets: non-health data health into Google of the from entry gains efficiency the counters indeed which data non-health in dominance Google’s It precisely is over time. unravelling market case, extreme the in and, risks for of cover bad or lack lower prices prices),slightly higher causing (e.g. them from them only surplus offering extract and risks good identify uniquely to enable them will data, health with combined data, non-health in dominance Google’s markets) these in actors to analytics and insights these itsells that extent the (to indirectly or itself) services these offers Google that (to extent the directly markets, insurance and in health profits enormous make to used be can data and non-health of health interaction The profiles. of users’ aspect on multiple data cumulated of stock unrivalled and firehose” “data own of Google’s on top bolted be would datastream Fitbit the that is deal this about unique is what Second, applications. health in of data use on rivals’ restrictions or placing wearables, of their users from collected data, health own their to access of demanding form the “compensation” take This could interoperability. maintain to order in competitors data manufacturers/health wearables rival from compensation require or alternatively also could Google multiple in ways. degraded be could interoperability and post-deal, future, the in restricted be could open source currently are that capabilities Android Those Play the Store. app into their place to allowed be to need also they for multiple and purposes; other smartphone, the to wearable the particularly Wearables manufacturers rely. complements manufacturers other on which Google-owned of dominant interoperability the by degrading indirectly but also providers/insurers, health and users of Fitbit adoption with the “pushing” by directly not only applications, data health in compete to hobble ability to their ability and incentive have the will Google that is concern , the wearable rival to markets). manufacturers As insurance health in standard already – behaviours certain adopting insured the to and premia benefits conditioning for benefits other instance, (for exchange Fitbit in use to incentives customers their give to providers health and insurers with agreements into entering by or others; not replicable are that elsewhere multiple in ways recoup it can because price below-cost at wearable the selling as –such wearables of Fitbitadoption over rival user side user the On insurers. and providers health to of analytics for sale the on rely data that supply chain the in operators of other and manufacturers, wearable of rival foreclosure (partial) is providers and health insurers to products competing offer to others of ability the undermine simultaneously to and side, user on the wearables rival over of Fitbit adoption the favour to ability and incentive the has Google First, 7 customers, and accumulating ever more ever data. andaccumulating customers, more comprehensive canofferbetter-targeted thankstodata-enabled data learning, sets products attracting more al.(2020),it iscommoninbigdata forthere motivated et. tobeapositivefeedbackloop: firmswithlarger/ byChen As , Google can adopt multiple strategies that would directly favour the the favour would directly that multiple adopt strategies can , Google rely on Android functionalities for connecting connecting for functionalities Android on rely yield price benefits benefits price yield . The concern concern The . 7 .

CEPR POLICY INSIGHT No. 107 September 2020 6 number of providers (as Android). have donenumber of providers and iOS they for mobile phones with to a small tip to likely are and effects network exhibit they as markets, system operating already present and growing in the insurance industry. The “wearable devices” market market devices” The “wearable industry. insurance the in growing and present already it is and industry care health of the future the as acknowledged is Personalisation made. be to profits enormous are there which in AI, and for data application of future amajor area as recognised is tech” “health that unquestionable it is First, dimensions. important two offer,to to point we would nonetheless evidence we do not have direct While merger. by this concerned supply the in chain actors other and providers, data health manufacturers, wearable of third-party evidence the probe and documents internal Google’s interrogate directly to placed best of course are authorities Competition HARM OF THEORIES THESE FOR EVIDENCE operating systems. tablet) and (smartphone mobile device into entrant apotential from Android protect also but could system, operating wearable adopted awidely developed that a rival from data location and interest, demographic, in dominance current its protect only wouldnot astrategy such (non-Apple) strategy: a“defensive” in leveraging wearables for all system Wear operating its favour OS to ability and incentive would have the Google attention, of consumer source new important a potentially are wearables develop. to Because continues technology voice-recognition as particularly Internet, the to for point consumers access new apotential are they because is generally. This important aparticularly be to likely also are they applications, data havemay for health systems operating wearables in considerations foreclosure dynamic around centred of harm theory aclear is there Third, data. non-health have comparable will firms other since no markets affected the in an SLC profitable, if and, harm consumer direct both causes again which merger of the increase price (hidden) future unknown We an decisions. this consider entrance for employment used orit selective being imagine decisions; insurance and services financial sensitive inform to used being for any application predictions such whom with and sex having you are whether predict phones to multiple Android from locations and rate, heart your night, of (for time the using predictions example, such make to ability improve the to likely evolution of the wearables market, this isn’t this market, evolution wearables of the dynamic for likely the accounting clear: is case Microsoft/Netscape the to The analogy 10 9 8 strongly prefer to remain private. remain to prefer strongly would users many characteristics personal predict already can Google app use, and history on browsing a consumer’s based that known widely is it also applications, its and data on health far so have we focused while dimension, additional an As markets. applications data of health structure (possibly) and increasing-returns the advantage due durablecompetitive Google’s to undermined is competition future potential as on DigitalPlatforms (2019). includingACCC indigitalmarkets, (2019),review) Crémer al.(2019), et HMTreasury (2019) andStiglerCommittee (includingmerger policy points have analyzing thestatus ofcompetition These ofreports beenmadeacrossahost asan“offensive”It healthdata wouldalsoserve fromwearables tocollect manufacturedbyrivals.strategy leveraging includingreligious ofotherintimatehost details, beliefs. websites related abuse,” to“Substance “Diabetes,” pain.” and“Chronic allowtargeting basedona Data brokers further may search that advertisers forpeoplewhoregularly Ryansubmissiondocuments visit forexample, (2020).The See, market for the dynamic evolution of competition in digital markets more markets digital in evolution of competition for dynamic the market 9 Foreclosure strategies are particularly likely to be effective in effective be to likely particularly are strategies Foreclosure 8 Combining health data with non-health data is is data non-health with data health Combining ) and nothing would prevent Google from using using from wouldprevent Google nothing ) and . There are already growing concerns about AI AI about concerns growing already are . There just a merger of complements! amerger just . In addition to the value wearables wearables value the to addition . In 10

CEPR POLICY INSIGHT No. 107 September 2020 7 in life sciences and health and wellbeing. and health and sciences life in on research a focus with Verily Calico and subsidiaries it owns and of records, patient millions analyse and view to providers healthcare and hospitals other and Mayo Clinic with it partnered analytics), data (health Deepmind of citizens), it acquired millions on records medical enormous collates which US, the in system healthcare private alarge Ascension, Cloud and by (a Google joint project Nightingale secretive Project records), established it for medical engine search on developingintent aspecific data and records of health (a Health repository Google it established area: growth massive this in itself position to already multiple steps taken indeed has Google services other from collated users of profiles personal the with data health sensitive –combining tech of health potential wearables atoehold in with Google it provides because valuable it is market; of this piece a small wearables market is is market wearables formally articulated. articulated. formally also be can concerns these that it illustrates as important is contribution this and describing, are we of effects some types of the formalises directly This markets. both in competitors foreclose and power market its leverage could Google which through together, care for health market the and for wearables market the would link merger the Moreover,found that long al. the et in Chen run. consumers harm ultimately could which foreclosure, market is a by-product of effect competition-intensifying this increase, can surplus total and theharm offset can for consumers competition aggressive of benefit more the which in some be may circumstances there While consumers”. for contestable aggressively compete will and under personalisation foreclosure market outside and option, the above surplus of consumer extraction through exploitation of consumers personalisation: from effects anticompetitive two identify power, theauthors and market with C firm amerged creates market each in operating firms between Amerger discrimination). (price pricing personalised through entity merged by the extracted be can personalisation by such created surplus consumer However,extra the tastes. consumers’ with better match that of offers personalisation Afor market in used be Bcan market in generated data the that in complementarities alone is projected to grow to over one billion connected devices by 2022. devices over connected one to billion grow to projected is alone 13 Op cit. 12 11 https://www.statista.com/statistics/490231/wearable-devices-worldwide-by-region/ (health care) and a market B for data collection (wearables). collection Bfor data care) amarket and (health applications data A for market in a operating respectively firms two between merger (2020) al. et by Chen paper anew mentioneddata-driven above, of a effects the models here outlined have we concerns to the support analytical offering emerge to beginning is research academic deal, by this directly inspired Second, market. wearables of the size the dwarfs tech health in available opportunity the doubt that enough). little good be would be can There mobile devices Android to connect must that of manufacturers space the but “owning” directly, data health of harvesting capability the it provides puzzle: this in piece more essential one Fitbit is deal. of this assessment of the focuses one should be main of the this that clear abundantly make already cloud Google’s AI and power with assets of these The combination sciences. life and GV, care arm, health in capital venture Google’s 2020). by (Peters, invested havebeen insurance offer to Billions itself begin it will See again Appendix B of Chen et al. (2020) for a concise summary ofGoogle’s al.(2020)foraconcisesummary et again AppendixBofChen See ambitions inhealthcare. and from which to leverage a more ambitious strategy of expanding in the giant giant the in of expanding strategy ambitious amore leverage to which from as “the merged entity is secured a large base of non-contestable consumers consumers of non-contestable base alarge secured is entity merged “the as at the same time of undermining rivals’ progress (not necessarily Apple’s, (not necessarily progress rivals’ of undermining time same the at not the real “prize” real the not . . And it does not matter that Fitbit is currently Fitbitcurrently is that not matter it does . And 12 Indeed Verily just announced that that that that Verily announced Indeed just 13 There are cross-market cross-market are There . As briefly briefly . As 11 But the CEPR POLICY INSIGHT No. 107 September 2020 8 manufacturers access to Fitbit’s health data (subject consent), user data to Fitbit’s to same on the health access manufacturers (2) wearable years; for other ten granting advertising arequirement for online data include (1) of which Fitbit’s important use most not the health to apromise remedies, to subject approve” deal the to poised “is Commission the that indicate reports Press would work. they whether and adopted be solutions could of what think to one starts once apparent becomes remedies of package suitable a designing of The difficulty concern. material Dupont ( too multiple in mergers taken has Commission European the view the is This that that was argument Microsoft’s where case, Microsoft the original from – before tradeoffs these with have dealt exploitation). consumer Authorities less (as others as well from over time of more innovation pay for prospect to the one willing should be price the view, our in is, space this in on ambitions Google’s abreak Putting dominance. that of leveraging record atrack has and markets product multiple related as well as data parties. parties. the merging by innovation data-driven foster can and offerings their personalise and data involving mergers that of course We recognise aresult. foregone as are by Google innovations certain imply that well may remedies, even and aprohibition, that We acknowledge data. health sensitive with of non-health combination due the to competition in a reduction and exploitation from consumers protect and providers data health and manufacturers among field wearable playing current the would preserve merger block the to A decision REMEDIES ON REFLECTIONS SOME competition. and of consumers detriment the to markets insurance of functioning the deteriorate further likely will tricks” probability. “exploitative Such average than higher with need will consumer the that services costly those exactly exclude that contracts personalised offering through over consumers advantage informational their exploit to companies enable insurance to likely is Google/Fitbit a case, such In by consumers. of or mistakes attention for limited model should allow 2019), al., when et doing (Chandra consumer so a number amore of mistakes realistic make consumers that workdocuments academic existing body of large and a difficult extremely is plan insurance ahealth selecting since advantage). And, information from even its more money collect to Google hence offerdeals worse and (enabling on average, risks worse face to tend will competitors as markets insurance health of functioning of the deterioration the wouldcause This conditions. health costly of developing risks lowest have the consumers which about information the by selling of consumers detriment further the to information this use could Google/Fitbit herself. consumer the develop than to likely is aconsumer diseases what predict better can Google/Fitbit that merger, case the problems. the Following however, often it be may health future likely at predicting good equally are firms and consumers which in and class, risk consumer’s a predict better to firms not allow does data superior which in al. et Chen in (2020) in a model arise formalised effects negative the Furthermore, 14 all innovation. The reality is that competition that is The reality innovation. all innovation efforts and increase prices of apps threatened by entry from Google (Wen andincrease from pricesofappsthreatenedinnovation efforts byentry andZhu,2019). among many,See, Federico al.(2019). et In anempiricalinvestigation, reduce ithasbeenfoundthat appdevelopers any to quote but one), where the loss of future competition and innovation was a was innovation but and quote one), to competition of future loss the where It is arguably dominant in non-health non-health in “anyone”. dominant not just is It arguably But is Google intervention would amount to expropriation of its IP and was going to kill kill going to was and IP of its expropriation to wouldamount intervention can have beneficial effects, as firms can better tailor their products products tailor their better can firms as effects, have beneficial drives innovation in most settings. most in innovation drives Dow/ 14

CEPR POLICY INSIGHT No. 107 September 2020 9 above described of harm theories exploitation the address For to example, practice. in policed would be how they and for circumvention scope over the a big mark question with detailed, and extensive both are that for remedies need the prohibition see we of a short transaction, the from harms consumer of likely on review our Based 2020b). ( cloud and platforms Android Google’s using from hindered not be would manufacturers wearable rival that a commitment (3) and Google; as terms 15 limits theuseofpatient’s healthinformation for treatment, protected payment, andhealthcare operations. In theUS, HIPAA isa1996law sensitive patient standards information. establishing toprotect Amongotherthings,it • • • consumers were making an informed choice with respect to targeting. to respect choice with informed an making were consumers that document to required be should furthermore Google choice. on the conditioned is not service of a use that and offers, or health advertisements for targeting not used is data shouldthat be setting privacy consumer default For the example, defaults. privacy-friendly (e.g. with basis annual) (e), asked be consumers on aregular (h) and (g) mandating and (f), data, health and non-health all across forgotten be to right the consumers provide Google that mandating (g) insurance, opt out to of targeted of consumers ability the mandating (f) advertising, opt out to of targeted of consumers to) (e) notlimited be need here would include (but ability the mandating Examples data. of their use over the control much greater consumers by granting mediated partially be could about concerned are we harms practices privacy consumer-friendly Require immediately intervene. to power the with regulator asector thus, and, monitoring would require restrictions use data illness). Again, of future (e.g.value on predictions based may consumers that exclude components ofto coverage it not used be that set should be arequirement markets, insurance in by itself used be to permitted not be used for health data applications. data for health used not be on non-health Google’s “inverse-HIPAA” protection an impose would this effect, In itself. of insurance or types other health or offer companies insurance to profiles –risk or indirectly –directly sell to data non-health with together data health using from prohibit Google would arestriction Such present. at for consideration of remedies list the in applications insurance and data for health data Fitbit only can Google that (d) but also requiring markets, insurance and data health in data non-health of Google’s characterisation any with data (c) of health combination the preventing restrictions use Data compliance. ongoing monitor constantly to needed be wouldlikely or atrustee existence) (not in regulator Asector avoid to circumvention. and it meaningful make to through be worked to would need much detail Google, by offered been services) (e.g. financial unravelling and/or market exploitation consumer about concerns strong particularly are there for which or services product other any and employment, services, and products health to unrelated only is data non-health existing Google’s that (b) requiring but also advertising, online in for use data health non- of Google’s characterisation any with data of health combination Data , minimal commitments should include: should commitments minimal , use restrictions use . While a (weak) version of this commitment appears to have to appears a (weak) commitment . While version of this (not just “data silos”) (a) silos”) (not “data the just preventing 15 Furthermore, if health data were were data health if Furthermore, used for online advertising advertising for online used . Many of the exploitation exploitation of the . Many data and say that it may say that and data . We this do not see Financial Times Financial use use , CEPR POLICY INSIGHT No. 107 September 2020 10 markets. related in services own its grants Google which that to equivalent terms on FRAND interoperability require to and markets, systems operating or wearable wearables the impacts which market any in deals exclusive to forbiddenshould be agreeing from Two Google that should be principles systems. general operating wearable and/or rival manufacturers wearable rival foreclose could Google ways many the all enumerate above described of harm theories foreclosure the To address 16 Minimal commitments include (but need not be limited to): notlimited be need include (but commitments Minimal data) markets. non-health and (and health thus system operating wearables data) and (and health wearables thus the both in advantage an Google wouldgive practice Each markets. system and/or operating wearables wearables the in competition distort to seek may Google that ways prevent some many of the to seek commitments The next be limited to): ex-post consequences of failing to prevent a harmful combination in digital markets markets digital in combination prevent aharmful to of failing consequences ex-post The place. in already were structure aproper regulatory if even take to road preferred the be cannot This monitoring. constant require to continue will and dimensions, multiple in of circumvention risk at complex, are they harm, long-run consumer and competition to risks the mitigate can that conceivable are some remedies While era. digital the in policy merger guide indeed and enforcement in runner afront remain to Commission for European the chance the provides merger The Google/Fitbit CONCLUSION and antitrust environments.and antitrust FRAND =fair, reasonable, andnon-discriminatory. FRANDtermsand conditionsare commonlyusedinregulatory • • • • providers providers insurers/health and Fitbit involving strategies of tying Prohibition quality. in investments for their costs fixed face that competitors endanger (or also pricing can low margins) cost marginal even since effective be it wouldnot necessarily Also, cost. relevant the calculating of difficulties the given to monitor difficult very be for wearables pricing of below-cost Prohibition markets. data health associated more importantly, and, for wearables market the into data non-health in position dominant its leveraging from prevent Google to unlikely appears this above, described use However, on data remedies absent Wear OS. own its with has Google as apps dominant Google’s all and OS rivals’ between interoperability comparable one mandate could precedents: are there as this formulate It to probably feasible is market. wearables the into markets product related one many in of its dominance their leveraging etc.) Chrome, Calendar, (e.g. Maps, share Play Store, market minimal than amore has Google for which services and products Google for all APIs but to APIs, Cloud Google and Android to not only access FRAND and Interoperability Search). This has the advantage of being feasible and easily monitorable. easily and feasible of being advantage the has This Search). (à Apple Google la and providers OS wearable rival disadvantage that manufacturers wearable rival major with deals of exclusive Prohibition remedies). Android the to response Google’s somehow (see, possible for example, always of aprohibition is circumvention and of playbook Google’s Tying enormous. a seem major is part commitment this of monitoring difficulties the Again, or patients. customers onto their Fitbit on pushing them conditional providers or healthcare companies 16 Minimal commitments that embody these principles include (but need not need include (but principles these embody that commitments Minimal – for instance, prohibiting Google from offering deals to insurance insurance to deals offering from Google prohibiting – for instance, . This commitment seeks to prevent Google from from prevent Google to seeks commitment . This . This commitment would commitment . This , it is very hard to to hard very , it is CEPR POLICY INSIGHT No. 107 September 2020 11 Authors’ note Authors’ for merger society. abad remains remedies bad with merger problems. Abad existing already but it avoids amplifying data, health to problems related not solve all does merger the Blocking data. location and interest, demographic, in position dominant Google’s protect and markets labour even and services medical insurance, health in consumers harm to likely is that data sensitive highly but one involving ecosystem, Google’s brought into being more gadget one about of not Fitbit just is acquisition the have we argued, do not As work. just that on remedies reliance hopeful their more decisively, bemoan and intervene to failure and academics often, too All consummated. being from mergers prevent harmful to is space this in control merger to approach principled only the time, over eggs” the “unscrambling of difficulties the given that held consensus awidely is there and again, time and time documented have been Strategic Management Journal Strategic (2011), T., Van M. Parker and G. Alstyne Envelopment”,Eisenmann, “Platform 31(5). plans”, Health Affairs among health choices by simplifying of Massachusetts example Day, P. and should R. follow (2012), the exchanges Nadash insurance state “New era digital Crémer, J., Y.-A. (2019), the de Montjoye Schweitzer for H. and policy Competition July. 3 Advertising Digital (2020), and CMA Platforms Online 173: 113-124; Economics of Public Journal externalities”, information with collection (2019), J., data Shin Choi, D.-S. Jeon B.-C. personal and and “Privacy Workingpersonalization”, paper, 26 September. (2020), J. N. Matsushima Choe, and Cong and C. mergers Z., Chen, driven “Data Foundations 1 health-care markets”, in Handbook of Behavioral Economics: Applications and (2019), and J. economics and Handel B. Schwartzstein A., “Behavioral Chandra, markets”, NBER data in PaperWorking No. inefficiencies 26296. and Prices (2020), Ozdaglar A. and “Too much Malekian Data: A. Makhoumi, D.,Acemoglu, A. Report Final (2019),ACCC Inquiry Platforms Digital REFERENCES but not of Caffarra. CRA, of aclient is Google to adverse matter Google-Fitbit the in (Vergé).markets Aparty technology in suppliers not and active complaint antitrust an in involved company (Peitz), sector asoftware and technology the not aclient in and authorities competition (Heidhues), sector technology several the not in clients and authority a competition (Genakos), sector (Duso), technology the authorities not in clients competition several Applesector (Caffarra), (Crawford), technology the in not multiple firms and other Apple, Microsoft, (for ETNO Bourreau), Amazon, are clients such with authors those for Google-Fitbit to unrelated on matters clients consulting or recent Current Insight. Policy this to connection in party any from payment taken none and has transaction, , report for EC DG Competition, April. April. Competition, for DG EC , report , Volume 2, pp. 459-502. : None of the authors is consulting for any party involved in this this in involved party for any : None consulting is authors of the 32(12): 1270–1285. policymakers look back and lament a lament and look back policymakers , 26 July. , Market Study Final Report, Report, Final Study , Market

CEPR POLICY INSIGHT No. 107 September 2020 12 40(9): 1336–1367. 40(9): Mobile Management Journal the Strategic Market”, App from Evidence Responses: Wen, W. Complementor and F. and Entry (2019), Zhu of Platform-Owner “Threat (2019), Platforms July. on Digital Report, Final Committee Stigler Protection Commissioner, 21 September. Data Irish the to submission Liberties for Civil have worsened”, Council to Irish appears and recorded, ever largest the is breach [Real-Time RTB data Bidding] the J. Commission, Ryan, (2020), Protection Data Irish the to complaint on from “Two years TheVerge.com,insurance”, 25 August. J.Peters, (2020), into company, getting sister is “Verily, health-focused Google’s March. Panel, Expert Competition Digital (UK) of the Report (2019), Treasury HM Competition, Digital Unlocking 29 September. promises”, Times Financial ads”, 24 September. Times Financial abstract=3393911). Disruption”, (available paper working https://ssrn.com/ at Welcoming Protecting and (2019), Shapiro C. and G., F. Morton Federico, Scott Innovation: and “Antitrust 18 July. released Android”), (2018), Commission 27 June. European AT.40099released Case Decision (“Google (2017), Commission European AT.39740 Case (Shopping)”), Decision Search (“Google University and a CEPR Research Fellow. aCEPR Research and University the Düsseldorf Institute for Competition Economics of the Henrich-Heine Paul Heidhues Fellow. aCEPR Research and School Business Judge Cambridge Genakos Christos Berlin. (TU) Universität Technische the at Economics Industrial ofEmpirical Professor and Berlin Tomaso Duso Programme. Organization Industrial ofCEPR’s Co-Director and ofZurich University the at ofEconomics aProfessor is Crawford S. Gregory Chongwoo Choe Australia. University, Monash at ofEconomics Professor Associate an is Chen Zhijun Europe. in economists) (a ofconsulting team Associates River Team ofCharles Competition the up heads Caffarra Cristina polytechnique de Paris). Telecom (Institut at Paris Marc ofEconomics Bourreau Professor is AUTHORS THE ABOUT (2020a), “UK regulator says Google not doing enough about scam not (2020a), doing enough scam about Google says regulator “UK (2020b), new after $2.1bn Fitbit deal clear to Google “EU poised is Head of the Firms and Markets Department at DIW DIW at Department Markets and Firms ofthe Head is is a Professor of Behavioral and Competition Economics at at Economics Competition and ofBehavioral aProfessor is is a Professor of Economics at Monash University, Australia. Australia. University, Monash at ofEconomics aProfessor is is a University Senior Lecturer in Economics at the the at Economics in Lecturer Senior aUniversity is

CEPR POLICY INSIGHT No. 107 September 2020 13 Academic Consultant at Charles River Associates. River Charles at Consultant Academic Vergé Thibaud Tor Fellow. ofRome CEPR Research Vergata and University the and School Tommaso Valletti Fellow. aCEPR Research and ofBusiness School University Aalto the at Professor Toivanen Otto Fellow. aCEPR Research and ofEconomics, School -Stockholm SITE leave) and Giancarlo Spagnolo Fellow. aCEPR Research and ofMaCCI Member Senior Mannheim, Michelle Sovinsky Fellow. aCEPR Research and ofMaCCI Member Senior a ofMannheim, University the at ofEconomics aProfessor is Schutz Nicolas Fellow.Research aCEPR and Experts ofEconomic Council German ofthe amember is and Monika Schnitzer Fellow. aCEPR Research and School Business Copenhagen Thomas Rønde Fellow.a CEPR Research and (MaCCI) Innovation and Competition for Centre Mannheim ofthe director Peitz Martin Presidents Vice President President Honorary and Founder Board ofthe Chair ofCEPR. those not and authors ofthe those are report this in expressed opinions The publications. to review its prior give not do Trustees the Centre ofthe but policy, on views include may CEPR research society. civil from drawn perspectives as well as viewpoints ofindividual spectrum abroad reflects output its of researchers, network alarge such on draws it Because ofpublications. sales and Members Institutional its from comes funding core its and matters policy economic on stand institutional no takes It groups. interest private and public all of independent CEPR is 1983, in founded was it since charity A registered relevance’. policy with excellence ‘Research is principle guiding CEPR’s ofkey decision-makers. hands the into results policy-relevant the to get and research, world-class to promote twofold: is Centre’s goal The universities. European in mostly based economists research ofover 1,500 (CEPR) Research anetwork is Policy Economic for Centre The RESEARCH POLICY ECONOMIC FOR CENTRE THE is Professor of Economics at the University of Mannheim, a ofMannheim, University the at ofEconomics Professor is is the Director of Helsinki Center of Economic Research, Research, ofEconomic Center ofHelsinki Director the is is a Professor of Economics at ENSAE ParisTech at ofEconomics aSenior aProfessor is and is a Professor in Innovation and Entrepreneurship at at Entrepreneurship and Innovation in aProfessor is holds a Chair in Comparative Economics at LMU Munich Munich LMU at Economics Comparative in aChair holds is Professor of Economics at Imperial College Business Business College Imperial at ofEconomics Professor is is a Professor of Economics at the University of University the at ofEconomics aProfessor is is Professor of Economics at University of Rome II (on II ofRome University at ofEconomics Professor is Hélène Rey Panizza Ugo Martin Philippe Botticini Maristella Mauro di Weder Beatrice Portes Richard Bean Charlie Sir