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2019-11-03| M&A

Google to Acquire Wearable Device Pioneer to Boost Healthcare Plans

by Rajaneesh K. Gopinath
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By Rajaneesh K. Gopinath, Ph.D.

Tech giant Google’s parent company Alphabet Inc. has decided to acquire FitBit as a means to confront stiff competitors in the digital healthcare market space including Apple’s smartwatch.

There used to be a time when patients could request the services of a doctor from their homes through a house call. With the rise of sophisticated multi-facility hospitals, house calls have become a privilege only a few could afford. However, present-day innovations are bringing back the trend of receiving care at home with a slew of wearable devices that combines software with healthcare.

Over the past few years, Google’s parent company Alphabet Inc. has embarked on a long list of healthcare-related endeavors with its in-house developments and acquisitions (See Figure). To name a few, it has launched partnerships with Mayo Clinic and Harvard Medical School to store patient data on its google cloud platform and offer solutions to physicians through analytics and machine learning tools. Through the power of Artificial Intelligence (AI), it is currently in the process of devising diagnostics for several life-threatening diseases. Last year, it brought in Dr. David Feinberg, the then CEO of Geisinger Health to oversee its many of its healthcare activities.

Although all the moving parts of its healthcare machinery are set to function smoothly, its progress in the wearable device industry is far behind the competition. The market is currently dominated by big players such as Apple, Samsung, Xiaomi, Huawei, and Fitbit. Its health-tracking platform, Google Fit, and Android operating system, Wear OS which was designed to work with various wearable devices of other companies have attracted comparatively few users. The growth of Apple’s smartwatch has also toppled Fitbit from the top position for quite some time now. At this juncture, Google has decided to improve its grip by acquiring Fitbit, Inc. for approximately $2.1 billion, priced at $7.35 per share in cash. This acquisition was welcomed by both companies.

“More than 12 years ago, we set an audacious company vision – to make everyone in the world healthier. Today, I’m incredibly proud of what we’ve achieved towards reaching that goal. We have built a trusted brand that supports more than 28 million active users around the globe who rely on our products to live a healthier, more active life,” said James Park, co-founder, and CEO of Fitbit. “Google is an ideal partner to advance our mission. With Google’s resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and make health even more accessible to everyone. I could not be more excited for what lies ahead.”

“Fitbit has been a true pioneer in the industry and has created terrific products, experiences and a vibrant community of users,” said Rick Osterloh, Senior Vice President, Devices & Services at Google. “We’re looking forward to working with the incredible talent at Fitbit, and bringing together the best hardware, software and AI, to build wearables to help even more people around the world.”

It remains to be seen how Fitbit users would react to this development with concerns about data privacy affecting Google in the past. “Fitbit will continue to put users in control of their data and will remain transparent about the data it collects and why. The company never sells personal information, and Fitbit health and wellness data will not be used for Google ads” the official statement from Fitbit mentioned. On the other hand, it’s stock prices have increased following the news.

References
  1. https://blog.google/products/hardware/agreement-with-fitbit/
  2. https://investor.fitbit.com/press/press-releases/press-release-details/2019/Fitbit-to-Be-Acquired-by-Google/default.aspx

 

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