Google’s $2.1B acquisition of Fitbit faces DOJ probe: sources
Google’s $2.1 billion acquisition of Fitbit will face scrutiny by the Department of Justice amid data privacy fears, The Post has learned.
The controversial merger in recent days was cleared for review by the DOJ after federal law enforcement tussled with the Federal Trade Commission, which had also sought authority to investigate the deal, according to a source close to the situation.
Both agencies are concerned that a Google-owned Fitbit would give the search giant an even bigger window into people’s private data, including sensitive health information, sources said.
Under the Hart-Scott-Rodino Act, all large mergers must file proposals with both the DOJ and the FTC, but only one antitrust agency reviews the merger.
Historically, most Google deals have been reviewed by the FTC, which in February created a “technology task force” to monitor anti-competitive behavior in Silicon Valley.
But the DOJ also is presently investigating Google for broader anti-competitive issues. In September, it asked Google for documents related to past FTC antitrust investigations.
That larger investigation was the main argument the DOJ made when asking for the Fitbit review in what a source described as a real “arm wrestle” between the agencies.
“The DOJ’s handling of Fitbit will give an early read on the Google investigation,” a DC source said.
With the DOJ probing the Fitbit deal, a DC antitrust attorney also noted, “There is a more direct line from the White House.”
President Trump has criticized Google for alleged anti-conservative bias. In August, he said he was closely watching the search giant.
Earlier this month, “60 Minutes” reported that Google had taken down more than 300 ads from Trump’s re-election campaign this summer for violating the search engine’s advertising policies.
Last month, Public Citizen and the Center for Digital Democracy urged the FTC, thinking it would get the case, to block the merger, arguing it would give Google the chance to collect more personal data including sensitive health information.
“Through its vast portfolio of internet services, Google knows more about us than any other company and it should not be allowed to add yet another way to track our every move,” the groups said in a letter to the FTC.
This fall, the DOJ reviewed Google’s June $2.6 billion acquisition of cloud analytics company Looker Data and cleared it in November.
Netflix shares dip after analyst calls model ‘unsustainable’
Netflix shares tanked after a Wall Street analyst warned the streaming wars could cost Netflix 4 million US subscribers next year if it doesn’t offer a cheaper, ad-fueled product.
The dip also came a day after bigwig investor Bill Ackman — who was rumored to be buying up Netflix shares — instead disclosed a stake in the laboratory instrument firm Agilent Technologies.
Ackman’s hedge fund Pershing Square Capital Management revealed its 2.9 million-share investment following speculation last month that he might be Netflix’s newest big investor.
Netflix shares were down 2 percent at $296.39 as of 10:34 a.m. Tuesday. The company did not immediately respond to a request for comment.
Netflix’s “premium” prices of $9 to $16 a month have become “unsustainable” amid increased pressure from cheaper platforms offered by the likes of Apple and Disney, Needham & Co.’s Laura Martin said in a research note.
Netflix could stave off a blow to its subscriber base with a new option subsidized by advertisements that matches its competitors’ price point of $5 to $7 a month, according to Martin. But the company’s resistance to advertising led her to downgrade Netflix’s rating to “underperform,” Needham’s lowest.
Netflix “has consistently stated it will not have advertising, which we believe will result in US sub losses,” Martin wrote. The company had about 60.6 million paid members as of Sept. 30.
Netflix has an imperative to offer a cheaper streaming plan as its valuation appears closely tied to subscriber growth and its US members are more profitable than their international counterparts, Martin wrote.
Disney+ became Netflix’s latest high-profile competitor with its rocky but explosive launch last month, not long after Apple got into the streaming game with its Apple TV+ service. More pressure will come from NBC and HBO’s forthcoming streaming platforms, which will take the hit sitcoms “The Office” and “Friends” from Netflix in the coming years, according to Martin.
Licensed shows like those generated more streaming minutes for Netflix this year than the company’s original productions, Martin said.
But Bloomberg Intelligence analysts see Netflix maintaining its stronghold on the industry thanks to its original programming.
Martin Scorsese’s mob epic “The Irishman” and the royal drama “The Crown” helped drive a 15 percent spike in Netflix’s global downloads last month even as Disney+ got off the ground, Bloomberg Intelligence’s Geetha Ranganathan and Amine Bensaid wrote Tuesday.
“We think Netflix will retain its dominance in the near term, as its large content budget allows it (to) keep producing potential hit shows that draw audiences back to its platform,” they wrote.
German Chancellor Merkel: Financial transaction tax is only appropriate for Equities - press
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Gapping down
In reaction to disappointing earnings/guidance:
- CONN -28.3%, ROAD -15%, DBI -15%, CASY -5.9%, CHWY -2.4%, TSM -0.6% (Nov revs)
Other news:
- CNST -5.9% (commenced public offering of 4.75 mln shares of common stock)
- LVGO -5.6% (announced public offering of 2.78 mln shares of common stock by selling stockholders)
- ABR -3.5% (upsizes offering by 500K shares and prices 6.5 mln shares of common stock at for gross proceeds of $91.9 mln)
- REGN -3.3% (reports indicate that Sanofi [SNY] could sell its stake in the company following lock-up expiration)
- AMRX -1.7% (to acquire 65.1% majority interest in AvKARE and its related affiliate for an implied enterprise value of $340 mln)
- BLUE -1.1% (reported updated data for bb21217 and for LentiGlobin gene therapy)
Analyst comments:
- NFLX -2.4% (downgraded to Underperform at Needham)
- CHD -2% (downgraded to Underweight at JP Morgan)
- VTR -0.8% (downgraded to Underperform at Wells Fargo)
Gapping up
In reaction to strong earnings/guidance:
- SFIX +12.9% (also appointed Elizabeth Spaulding as President), CDMO +9.4%, MDB +7.4%, AZO +4.9%, PHR +4.1%, MTN +2.3% (also detailed planned capital investments for CY20), CMD +2.1%
M&A news:
- NLOK +4.3% (said to have attracted deal interest from several parties, including Intel's (INTC) McAfee, according to the WSJ)
Other news:
- SUPN +10.1% (provided update regarding Phase III study of SPN-810 for Impulsive Aggression in patients with ADHD)
- CMRX +7.9% (presents data relating to dociparstat sodium program at ASH)
- PSN +5.1% (won "prime position" on DISA's $7.5 bln SETI contract)
- SNY +4% (says pivotal Phase 3 open-label, single-arm trial evaluating the safety and efficacy of sutimlimab in people with primary cold agglutinin disease met its primary and secondary endpoints)
- EDIT +1.9% (reported in vivo proof-of-concept data for EDIT-301)
- ENOB +1.6% (announces that important scientific findings reveal an innovative approach to potentially treat and cure Hepatitis B)
- GOLD +1.2% (to sell their aggregate 90% interest in the Massawa project in Senegal to Teranga Gold Corporation for total consideration of up to $430 million)
- ENB +1% (increases quarterly dividend by 9.8% to $0.81 per share)
- AUPH +0.8% (prices offering of 11,115,165 shares of common stock at $15.00 per share)
Analyst comments:
- RDFN +3.8% (upgraded to Buy at DA Davidson)
Early premarket gappers
Gapping up:
- SFIX +11.9%, SUPN +9.3%, MDB +8.6%, SNY +4.2%, PSN +3.8%, NLOK +3.3%, A +3.2%, MTN +3.1%, CDMO +2.6%, EDIT +0.8%, BLUE +0.5%, TOL +0.5%
Gapping down:
- ROAD -15%, DBI -11.8%, CONN -7.4%, CASY -6%, LVGO -5.6%, CHWY -4.1%, ABR -3.9%, REGN -3.7%, NFLX -2.1%, AUPH -1.4%, LULU -0.6%