Google is a company that has produced and distributed some of the highest-grossing and most sold electronic goods of all time or collaborated with companies in the same field. As such, all new items launched by Google and even revised versions of old ones are something for which enthusiasts eagerly wait. Thus, the long wait for the $2.1 billion Fitbit deal by Google has been straining specific people who demand an explanation for the delay.
Fitbit, Inc.is an America-based fitness and consumer electronics company. With the headquarters situated in the city of San Fransisco, in California, the company is responsible for the development of several items. The list of these products includes smartwatches, activity trackers, and wireless wearable technology, which can keep a record of the heart rate, the number of steps walked or climbed, sleep quality, and many more fitness-related metrics. Initially, the founders named the company Healthy Metrics Research, Inc., before changing it to its current name in October 2007.
On March 10, 2020, a publicized report revealed Fitbit to be the fifth largest wearable establishment in shipments. Therefore, with a 14.8% growth per year, the company stands second only to Apple and Xiaomi. With a total of 28 million consumers and above 100 million devices sold as of yet, Fitbit holds the ranks with the highest-grossing companies ever.
Google Deal: Fitbit
On November 1, 2019, Google declared its plans to buy Fitbit at the expense of $2.1 billion. People expected the transaction to be completed by the mid of 2020. Nevertheless, the antitrust regulators of the European Union delayed the deadline yet again, to January 8, 2021. Additionally, the U.S. authorities might complicate the deal further. This incident could occur due to the antitrust case against Alphabet, the parent company, or Google as a whole. Recently, Google proposed concessions to the European Commission. The proposed deal would restrict Google ads from utilizing Fitbit data, allowing rival companies to expand their franchise. The other party has seemingly accepted the deal. Nonetheless, it could subject to variations on inspection by critics.
Impact on Market: Fitbit
With the delay in the $2.1 billion deal, Fitbit has started to lose market shares. Fitbit’s overall market in wearable goods experienced a decrease of almost 30% between Q2 2019 and Q2 2020. The selling quantity fell from 4.6% to 2.9%. Furthermore, wrist-worn products underwent a fall by a similar number, from almost 9.8% to 7.3%. As such, with even more delay to the deal, the merger has become one of the most apprehensive transactions in the history of the business.
History might record Google’s deal with Fitbit for $2.1 billion as the only merger deal that qualifies as both a pre-pandemic and post-pandemic deal. Nevertheless, suppose regulators decide to block the deal any further or even wholly, in either the U.S. or Europe. In that case, Google might have to pay a hefty sum of $250 million to Fitbit.
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