Following reports last month, the European Commission announced this week that it is officially opening an investigation into Google's proposed acquisition of Fitbit (FIT). The Alphabet (GOOG -0.13%) (GOOGL -0.07%) subsidiary had made an offer last November to scoop up the wearable tech specialist for $7.35 per share in cash in a $2.1 billion deal that immediately attracted scrutiny over fears that the search juggernaut would leverage sensitive health data for ad targeting.

Here's what antitrust regulators said about the deal.

Fitbit product portfolio, showing four fitness trackers and three smartwatches

Image source: Fitbit.

What competition regulators are afraid of

Data usage remains the primary concern that regulators are worried about, even as Google and Fitbit tried unsuccessfully to preemptively address the issue. Both companies assured investors and regulators that Fitbit's trove of highly sensitive health data would not be used for ads when the deal was first announced. But regulators were reportedly looking for a formal guarantee that would be more legally binding than a press release.

The Commission is concerned that health data collected by wearable devices could become an "important advantage in the online advertising markets," which Google could potentially leverage for increasingly sophisticated ad targeting and personalization. That could have the ultimate effect of increasing barriers to entry for competing advertising platforms.

European antitrust chief Margrethe Vestager said in a statement:

The use of wearable devices by European consumers is expected to grow significantly in the coming years. This will go hand in hand with an exponential growth of data generated through these devices. This data provides key insights about the life and the health situation of the users of these devices. Our investigation aims to ensure that control by Google over data collected through wearable devices as a result of the transaction does not distort competition.

Regulators will also scrutinize the potential impacts on the nascent digital healthcare sector, which has emerged as a new battleground among tech giants including Apple (AAPL 0.77%). Fitbit previously acquired cloud-based health platform Twine Health as part of that ongoing competition, while Google's Nest purchased health-monitoring start-up Senosis. The investigation will also attempt to determine if there will be an incentive to hinder interoperability of competing wearable gadgets with Android smartphones.

Apple is the No. 1 wearable technology vendor with its popular Apple Watch, which does not work with Android phones. The Mac maker's wearable segment is among its fastest-growing businesses, and CEO Tim Cook has repeatedly said that health will be the company's "greatest contribution to mankind." Fitbit is the No. 5 wearables player.

Investors have been skeptical about the proposed acquisition from the beginning, as Fitbit shares have consistently traded at a meaningful discount -- rare for an all-cash deal -- to the offer ever since it was announced.

"This deal is about devices"

Google continues to reiterate that it will not use Fitbit data for advertising purposes. Hardware chief Rick Osterloh penned a blog post in response to the news, arguing that the acquisition is intended to strengthen competition in the market for wearable devices while noting that Google has offered to make a legally binding commitment around data usage.

"We believe the combination of Google and Fitbit's hardware efforts will increase competition in the sector, making the next generation of devices better and more affordable," Osterloh wrote. "This deal is about devices, not data."