Google just went from being a nobody in wearables to a top player with Fitbit, and that's sure to put an even bigger target on its back

Hollis Johnson/Business Insider

• Google has acquired smartwatch maker Fitbit for $2.1 billion, giving it a sizeable presence in the wearable technology market.
• The move comes as lawmakers have been pressuring large tech firms like Google over whether their size and influence has enabled them to become too powerful.
• Google's software already dominates the smartphone industry, as it holds an 87% grip on the market. Now it owns the third-largest smartwatch company in the world behind Apple and Samsung.
• The acquisition could make it difficult for Google to downplay concerns over its size and influence moving forward.
• Visit Business Insider's homepage for more stories.

Google and Fitbit announced on Friday that the search giant would acquire the smartwatch maker for approximately $2.1 billion in cash - an acquisition that comes as the Mountain View, California-based tech giant has been under heavy scrutiny from lawmakers worried about the company's size and power.

Google's acquisition of Fitbit will bolster its presence in the wearable technology market, a sector that it's largely been absent from as companies like Apple and Fitbit have taken the lead. Google operates a smartwatch software platform called Wear OS that firms like Fossil, Kate Spade, Misfit, and other watch makers have used to power their timepieces, but it doesn't have a flagship product of its own as it does with its line of Pixel smartphones and Pixelbook laptops.

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Acquiring Fitbit now means that one of the most popular smartwatch brands in the world is part of the Google portfolio, although it's unclear whether the company will continue to let Fitbit operate independently or if it will brand future products under Google's name.

The acquisition comes as large tech firms like Google, Apple, Facebook, and Amazon are under more scrutiny than ever over their size and influence. Google already operates the world's most popular mobile platform; its Android software can be found on 87% of smartphones around the world, according to the International Data Corporation. It also claims 58.7% web browser usage through Chrome, says W3Counter, a website that monitors website traffic patterns.

With Fitbit becoming a part of the company, Google now claims a significant portion of the wearable technology market as well. Fitbit is the second most popular smartwatch maker in the United States, with 24.1% of the market as of the second quarter of 2019, according to Canalys. It's also the third-biggest smartwatch vendor worldwide behind Apple and Samsung according to Strategy Analytics, with 9.8% of the global market as of the second quarter of 2019. That essentially skyrockets Google from being a bit player in the wearables industry to one of the top brands in the world seemingly overnight.

The move also means the trove of health data that Fitbit users have shared with the company over the years is now part of Google. That could include data like logs that Fitbit users have created to track their nutrition, weight, and sleep, as well as information that's shared to create a Fitbit account, like date of birth, height, gender, and email addresses.

Google said in its announcement that it will not use Fitbit health and wellness data for ad targeting, adding that it will give Fitbit users the option to review, move, and delete their data.

Google's big expansion into the wearable tech and health market comes amidst concerns that tech firms are becoming too powerful and may be hampering innovation. Lawmakers questioned executives from Google, Facebook, Amazon, and Apple in July about the size and influence of their businesses. During the hearing, Representative David Cicilline, chairman of the Subcommittee on Antitrust, Commercial, and Administrative Law, said that the internet has become "increasingly concentrated, less open, and growingly hostile to innovation and entrepreneurship."

The Department of Justice also announced in July that it will review whether market-leading online platforms are engaging in practices that stifle competition. The press release announcing the probe didn't specify any companies by name, but mentioned it will entail looking at the search, social media, and retail industries - suggesting that firms like Google, Facebook, and Amazon would be at the center of the investigation.

Democratic senator Elizabeth Warren also proposed a sweeping plan in March that suggested regulating large tech firms and rolling back certain mergers, such as breaking Instagram and WhatsApp away from Facebook.

Google's acquisition of Fitbit will likely only further fuel such scrutiny, and could potentially make it more difficult for the search giant to downplay such concerns in the future.

Get the latest Fitbit stock price here.