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Is the regulator only allowed to consider the impact on competition in the product category, or can they also look at the wider impact on data? Like the largest email provider on earth that already analyses everybody's communication for advertising purposes also getting access to people's health data.

This could be seen as hindering competition, not in the product, but by gaining an (even more) dominant position in the "data" market?

I think this is a good point, and is probably what the market is worrying about, explaining the arbitrage opportunity.

The wording of the Clayton act is this: you can't do an acquisition where the effect "may be substantially to lessen competition, or to tend to create a monopoly."

It is true that the regulator (in this case, the FTC) can define the market narrowly or broadly. If they define it narrowly as smartwatches, then there can be no objection to the deal, since Google does not already have any meaningful share in this market, so it can't lessen competition. In fact, it should increase competition with the major player (Apple).

If they try to define it as 'health data' for instance, then I guess they have to include HMOs, drug and device companies, and Google is practically absent from this market at the moment, so the Fitbit acquisition doesn't change the competitive environment.

If they define it very broadly in the way you suggest, as the 'data' market, then Google does have a lot of data, but then, so do a lot of other companies, like Apple, Facebook, Netflix, Amazon, and even Walmart, phone companies, etc. etc. With such a broad definition, it would be hard to make the case that Google has a dominant position, even if they do have a strong position.

It would be hard to make the case that Facebook can buy Instagram and WhatsApp, or T-Mobile (#3 carrier) can acquire Sprint (#4), but Google can't acquire Fitbit, because... data??

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