Fitbit Purchase Is Under Federal Investigation – Will Google Be Blocked?
The United States Department of Justice is launching a formal probe of the upcoming multi-billion Fitbit acquisition planned by Google. The probe concers senstive user data that Google would gain with Fitbit.
Google (NASDAQ:GOOGL) announced the $2.1 billion purchase in November which caught many off guard. A few weeks after we discovered that Facebook and Google had fought "tooth and nail" for the rights to buy the wearable device maker.
The government has taken issue with the fact that Google will now have even more user data per individual, a sentiment that has been echoed by numerous consumer and privacy advocacy groups since the deal was announced. The idea is that Google makes its money by selling ads and data mining - so when the world's leader in targeted advertising announces it is purchasing a top generator of user data many eyebrows will be raised.
We've learned that the DoJ and Federal Trade Commission actually fueded over who had jurisdiction to investigate the matter and its the DoJ that came out on top this time.
Its perhaps because the DoJ is already in the midst of a wider-ranging investigation over general monopolistic concerns by Google. We'll see how serious the Department of Justice wants to be when it comes to maintaining a check on Google's power. It's even possible that the deal could be given the green light only with stipulations and restrictions in place, or going even further the acquisition could be blocked all together.
There is one particular group of concerned people about possible outcomes of the investigation and that's Fitbit (NYSE:FIT)investors. Fitbit stock soared 70% in a week thanks to the news of Google's pending purchase price of $7 per share. Should the deal get blocked by the DoJ a crash could very well be in store for Fitbit stock.