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full E.U. antitrust probe for Google+Fitbit? -3


This is now official.  The only interesting part is that last bullet point where the Commission will examine
whether Google would have the ability and incentive to degrade the interoperability of rivals' wearables with Google's Android operating system for smartphones once it owns Fitbit.
My answer is, of course it has the ability.  As for incentive... recent analysis shows that Google is doing whatever it takes, ethical or not, to prop up its earnings.  The trend is well established at this point; just ask Mozilla.  So regulators are right to seek protections, however ineptly.

That said, I still believe Alphabet has bigger fish to fry with this transaction.  The company knows it needs to leverage its superior cloud and AI technology to succeed in the long term.  This morning's cloud deal with Best Buy is the latest in a long series of corporate wins that shows the right way for Google to diversify, in contrast to my comments on its business moves yesterday and Friday.  The next step will be partnering with research organizations, and you can bet that Google will find ways to share data with and collect data from third parties using supposedly open systems.  This will check the regulatory box while sustainably transitioning its business.  Recent earnings show that the moves won't be enough offset other challenges in the short term, but my reasoning below on the Fitbit arbitrage stands.

On 7/30/20 11:24 AM, Esekla wrote:
Reuters is reporting that the E.U. will announce a full anti-trust probe of Google's Fitbit acquisition next week.  Although this has potential to derail the purchase entirely, I've already given my reasoning on why Google will make the necessary concessions.  Thus, my guess is that this will simply add to the certainty of the closing being delayed until May. 

That is still significant, though.  Closing 10 months from now means that FIT would need to drop at least to $6.10 in order to earn the 20% annualized return that I target.  The decimation of yields everywhere by central banks may lower that standard for other market participants, but I am again willing to miss out if so.  I am instead left glad that I anticipated this prospect from other events and hedged my position on prior gains.  I'll continue monitoring the stock price and will be happy to take short term gains again, as available.