Alphabet’s Buyout of Fitbit Sets It Up To Rule The Consumer Health Data Business

In early November, news broke that Google parent Alphabet had agreed to acquire wearables maker Fitbit for about $2.1 billion in cash.

The agreement positions it to become the top vendor in the maturing market for patient-generated health data. More specifically,  it offers the Big Tech giant access to massive datasets drawn from more than 28 million Fitbit users. In so doing, it sets up Alphabet to better compete with Apple, whose smartwatch has made significant inroads in the fitness tracking space.

Alphabet was not the only global consumer tech giant hot to acquire Fitbit. While it was known at the time that there were competing bids for the wearables company, it’s since become public knowledge that Alphabet took part in a bidding war with Facebook. However, Facebook apparently wasn’t quite as eager as Alphabet was to win.

To be sure, Facebook was serious about stealing Fitbit away from Alphabet. The social media giant went through a round of escalating bids which more than doubled as the competition got hotter. However, Facebook’s “last, best” bid was $7.30 per share, and Alphabet edged it out with a final bid of $7.35 per share.

Yes, I know, from a health IT reader’s perspective, corporate M&A news is probably something of a snoozefest. The thing is, I think there are some things the deal tells us about Google’s plans which may yet have an impact on the HIT world.

First, the deal underscores that Alphabet – for which gathering and reselling access to health data is becoming an important part of its strategy–is willing to turn on the money spigot to get a firm foothold in wearables.

This makes a lot of sense. While healthcare organizations have long had an eye on leveraging wearables data to improve patient care, getting that data together can pose a big challenge. It will be a lot easier to work with Google/Alphabet to marshal wearables data they can use, at least for research and experimentation.

The acquisition also suggests that Alphabet/Google is looking at ways to form a stronger direct connection with healthcare consumers, something which it should be able to do handily once it has Fitbit’s customer list in hand.

Having a direct connection to Fitbit users puts it smack in the middle of consumers’ healthcare process, which will be immensely valuable. This, of course, is where Apple has been headed for some time, but there’s still room for other consumer tech organizations to form cozy relationships with healthcare consumers.

Of course, with Facebook working so hard to capture Fitbit, it seems clear that it sees a big opportunity there as well. It’s not clear to me how Facebook will use Fitbit assets, but clearly, Facebook’s leadership is looking to further cement consumers’ insane loyalty to the platform by helping them integrate and track their health data.

Beyond that, it’s not clear what they were planning to do on the wearables front, but even if Facebook bought Fitbit as a placeholder for future healthcare activity, it’s hoping to become part of consumers’ healthcare consumption process, be it as an advertising medium, content provider or health data host.

The agreement between Alphabet and Fitbit should become final next year, so nothing of note is likely to come out on its plans for a while. In the meantime, perhaps Facebook will find another well-positioned wearables player to add to its roster. Expect to see more battles over well-positioned wearables companies over the next year!

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

   

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