The Google’s $2.1 billion purchase of Fitbit sounds like a great news not only because it saved the company from crumbling, but also because Apple will now have a competitor to beat when it comes to wearables. Apple has been enjoying the dominance orchestrated by less competitiveness and the monopoly that Fitbit’s undersize granted it.
But not anymore, with Google’s acquisition of Fitbit, the market for wearables has been thrown into competition once again. Google hopes that it can at least catch up in terms of fitness tracking and wellness functionality.
Upon the announcement of a deal by the two companies, Fitbit’s stock rose to almost 16 percent, the highest in recent times. As part of the deal, Fitbit will be pooling its resources under Google instead being a subsidiary of Alphabet.
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Apple watch has dominated the market where Fitbit was only playing the underdog competitor. A situation the new deal will push to change. Google sought to fill a gap in its hardware lineup that currently lists phones, tablets, clamshells, headphones and speakers. But there are challenges, bordering on user privacy and shipping partner.
But in a statement, Fitbit called Google the “ideal partner to advance our mission,” it said that Google will only advance its tradition of putting users in control of their privacy and how their data is used. The statement made the assurance that users’ health and wellness information will not be used for targeted ads by Google. And in the matter of shipping, the future versions of Fitbit Versa is likely going to be shipped with the assistance of Google instead of Amazon’s Alexa.
Google also noted that the acquisition of Fitbit will bring the best out of its smartwatch platforms and health applications; revealing their intention to share the fitness tracking device with partners. But the acquisition was actually necessitated by the fact that Google has a slim chance of competition with Watch OS without the partnership that will create a diverse range of products.
Although the acquisition has created an avenue for Fitbit to compete with Apple, it has made the perceived monopoly of the tech industry by the dominant companies a truth.
Google had Facebook to compete with in the bidding to acquire Fitbit, but beat them to it by paying double the amount Facebook offered: A situation that confirmed the fears of many that the tech industry is gradually being narrowed to a few giants in field flexing financial muscle.
Earlier in the year, Google had acquired Fossil’s smartwatch technology for $40 million, showing aggressive determination to expand its paths in the field of wearables.
Facebook also has been trying to up its game in the hardware market with Oculus virtual headsets, smart speakers, planned AR glasses, the acquisition of the fitness app called Moves back in 2014, and recently, the CTRL-labs, a startup developing technology that can interpret human brain signals through an armband, acquired in a deal worth around $750 million.
It is noteworthy that the two companies have been on the list of antitrust probe in the U.S. where their activities have spurred the interest of regulators to investigate if they are leveraging their dominance unfairly to hurt competitors.
The mutual interest of the two companies in Fitbit and hardware tech is a confirmation that the anticipated muzzling of smaller companies in terms of value-based competition is becoming faster a reality than imagined. And that has been the basis for the call for a break-up of the big tech companies, currently being spearheaded by the Democratic presidential aspirant Elizabeth Warren.
In her publication on Medium on March 8, she decried the growing dominance of a few companies in the tech industry, and how it has enabled them to bully their way into position of acquisition of smaller companies that can’t keep up with the competing measures that has been set so high through accumulated influence of the big tech companies.
“Today’s big tech companies have too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.
“I want a government that makes sure everybody – even the biggest and most powerful companies in America – plays by the rules. And I want to make sure that the next generation of great American tech companies can flourish. To do that, we need to stop this generation of big tech companies from throwing around their political power to shape the rules around their economic power to snuff out or buy up every potential competitor.
“That’s why my administration will make big structural changes to the tech sector to promote more competition – including breaking up Amazon, Facebook and Google,” she promised.
It is a glaring fact swinging with crippling shots, and small businesses are at the receiving end of it.
Therefore, Fitbit didn’t fail because it lacked the needed substance to succeed, it failed because it lacked the weight and muscle to get into the ring with titans. Alas, it’s the same story with many other companies. It’s only a matter of time before they fell into acquisition space that the tech bullies have created.