Regulators expected to make Google sweat for Fitbit deal approval

By Diane Bartz and Paresh Dave

WASHINGTON (Reuters) - U.S. antitrust regulators have little reason to oppose plans by Google's <GOOGL.O> parent Alphabet to buy Fitbit <FIT.N>, but that does not mean, backed a bevy of anti-Google lawmakers, U.S. officials won't give the proposed purchase extra scrutiny.

Google is already under antitrust investigation by the Justice Department, the House of Representatives Judiciary Committee and dozens of state attorneys general for allegedly using its massive market power to crush smaller competitors.

Fitbit has raised privacy concerns in the past: In 2011, the sexual activity of people using the health and fitness tracker was found to be publicly accessible online.

When Alphabet on Friday offered to acquire the U.S. wearable device maker for $2.1 billion, privacy advocates and lawmakers had cause for concern. [L3N27H342]

While antitrust experts said they did not expect the proposed merger to be stopped by U.S. antitrust enforcers on the basis of existing law around anti-competitive practices, the deal will be closely scrutinized, given bipartisan misgivings about big tech companies.

Fitbit pledged that Google would be transparent about how it used personal data. "We will never sell personal information to anyone. Fitbit health and wellness data will not be used for Google ads," it said.

"There are so many ways to finesse that statement," said privacy expert Joseph Turow, who teaches at the University of Pennsylvania. "We have to figure out what that really means."

Google already has a vast stores of data it uses to market to people, everything from what they read online to what they watch on YouTube, to where they go using Google Maps. The deal would give the advertising giant a treasure trove of information about everything from how well Fitbit's 27.6 million users sleep at night, to when and how they exercise.

Information from Fitbit fits with the technology industry's move into what Turow calls "bioprofiling," which identifies people by their voice, facial features or other biological element.

"I'm sure they would say that these are sensitive data and section it off," Turow said.

Google for years has said it does not personalize advertising based on health conditions and limits tracking of sensitive health information.

Lawmakers may also have concerns. Representative Pramila Jayapal, a Democrat from Washington, urged tough scrutiny.

"Google and many of the other largest tech companies are building broad, intersecting empires of information about consumers through hundreds of acquisitions that are too often not scrutinized, much less challenged," she said in a statement.

Google has sought to make money in healthcare in other ways, including applying artificial intelligence software to healthcare data. As the company seeks customers for its AI tools, it has demonstrated how such technology can predict diseases, the need for hospital stays and other issues.

Privacy proponents expressed opposition to the transaction.

"Health is the ultimate gold mine here," said Jeff Chester, director of the Center for Digital Democracy. "It's extremely troubling. It's a big, big move into our deepest and most personal and private parts of ourselves."

Alphabet has other plays in the industry, including its Verily biotech company and its venture capital fund GV, which has made more than a third of its investments in life sciences.

Both Google and Fitbit have had privacy lapses.

Aside from tracking sexual activity, Fitbit devices came under scrutiny last year when military users who had connected to the fitness map app Strava inadvertently revealed locations of bases in conflict zones.

Google this week was accused by Australia of misleading smartphone users about how it collected and used personal location data. {nL3N27E09J]

(Reporting by Diane Bartz; Editing by Dan Grebler)