In the big leagues of business, and not just the tech world, we’ve gotten used to businesses acquiring others when they fail to succeed in a certain field, or if they wanted an expedited entry into said field. This month, Google has done that once more.
FitBit announced last Friday, November 1st, that it will be acquired by Google for $2.1 billion in cash, at $7.35 per share.
Again, this is by no means new ground for Google, which acquires smaller businesses in all manner of different sectors as it continues its push towards a conquest of the tech world.
So, why FitBit, and why now?
Even though Apple Watch is the be-all end-all of smartwatches today, it was Google that got into this market first.
“Google announced WearOS, known as Android Wear at the time, with a plan to do what it did for smartphones: create an operating system that runs millions of devices, but leave the gnarly manufacturing to others,” Bloomberg explains. “But over the past few years, [its] effort languished, while the Apple Watch is dominating the fast-growing wearables market.”
Time notes that Google had “already spent big money on wearable tech — in 2019, it paid $40 million for technology and personnel from watchmaker Fossil Group’s research and development team.”
Yet, it still wasn’t breaking new ground.
So instead of wasting precious R&D and marketing dollars developing a completely new wearable with zero existing customers, Google has opted for the easier and debatably more logical option. While the FitBit is by no means the king of wearables it had been before the launch of Apple Watch in 2015, but it still holds a veritable name in the market, noting 27.6 million active users in 2018 a growth of 9%. According to FitBit co-founder and CEO James Park, this made them the “#2 player in the smartwatch category in the U.S.”
Will this then make Google the #2 player in the US smartwatch market? Not likely, given FitBit users’ initial reactions.
Many FitBit users don’t trust Google with their health data
Given Google’s history of collecting massive swathes of data on its users, FitBit owners have been justifiably worried. This is doubly worrisome when you consider that as recently as late last year, Google reported a breach that had exposed 52.5 million users’ data.
So, naturally, many users took to Twitter to vent their frustration following the acquisition announcement.
While most of these users surely use Google on a daily basis, aware that their browsing data is being collected, they draw the line when it comes to the sensitive health data that FitBit records.
Rick Osterloh, Senior Vice President of Devices & Services at Google, did try to ease concerns in a blog post: “Similar to our other products, with wearables, we will be transparent about the data we collect and why. We will never sell personal information to anyone. Fitbit health and wellness data will not be used for Google ads. And we will give Fitbit users the choice to review, move, or delete their data.”
Health tech is the place to be
While Google will fight a somewhat uphill battle early on, there is a lot of room for success – and the move to smartwatches is one of many steps. Steps to where, you might ask? Why, health tech, of course!
We’ve been preoccupied by the size of smartphone screens and the slimness of tablets for the better part of last decade. The true innovation – and big bucks – exist in health tech, however. This has been the case for many years, with smartwatches an infantile step into the larger world of health technology, a sector that holds great opportunities for business. Companies have been aware of this for many years.
“Apple’s largest contribution to mankind will be in improving people’s health and well-being,” Apple CEO Tim Cook told TIME in an interview last year.
Google acquiring FitbBit is one of many moves the company is taking in the healthcare industry.
Venture capitalists invested a record $10.8 billion last year in startups working in health-related fields like biotech and genetics, according to deal-tracking site PitchBook.
Regionally, companies like remote surgery firm Proximie are investing in the best health tech has to offer.
The sector is rapidly growing, and we will soon see more big corporations get a foot in the door as they try to capitalize on it.