Google Pays $2.1 Billion to Get Fit(bit)

Google last week announced a deal to acquire wearable
fitness device maker Fitbit for US$2.1 billion. The acquisition will give
Google, whose parent company is Alphabet, an immediate
leading position in the wearables market. Google will be poised to compete
against the likes of Apple and Samsung rather than having to build up
market share from scratch.

Fitbit, founded in 2007, is one of the pioneers in the
activity tracker space. According to a report IDC published last year, it was the third-largest wearable company, based on shipments, trailing Xiaomi and Apple.

Fitbit’s products are
carried in approximately 39,000 retail stores in more than 100
countries around the world.

“More than 12 years ago, we set an audacious company vision — to make
everyone in the world healthier,” said Fitbit CEO James Park.

“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,” he added. “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.”

The transaction is expected to close in 2020. It is subject to
customary closing conditions, which will include the approval of
Fitbit’s stockholders as well as regulatory approvals.

Built-In Audience

Google already has its own branded Pixel Watch, but Fitbit could
provide it with greater market share — and more
importantly, loyal customers. Other tech firms, notably Microsoft, have learned it is easy enough to launch a product in an established
market. However, getting customers to switch to a new platform is extremely
challenging.

With 28 million users, Google will be an established player — but will
it continue to advance Fitbit’s core mission for those users?

“Before the acquisition, Fitbit was clear they weren’t interested in
selling to anyone not able to continue their mission of assisting
consumers in living a healthy lifestyle,” said Julie Sylvester,
producer of the upcoming CES 2020 Sports & Fitness Tech and Wearable Tech Summit.

“With the acquisition of Fitbit, Google is adopting technology that
will expand their expertise in the smart watch area and add
functionality to their ever-expanding wearables market,” she told
TechNewsWorld.

“The advantage is they are going to be able to combine the Google
knowledge with the Fitbit simplicity of design,” Sylvester added.

This is not the first time Google has made an acquisition to
establish its presence in an existing category.

“As Nest users discovered, Google has a ‘move fast and break things’
approach to consumer electronics products,” said Steve Blum, principal analyst at Tellus Venture Associates.

“Its continued support of any particular piece of Fitbit hardware will
depend on how well it ‘fits’ into Google’s overall business model,”
he told TechNewsWorld.

Business as Usual

For most Fitbit users, it likely will be business as usual, even if the
products fall under the greater Google brand. If anything, Fitbit
products could be more innovative, thanks to Google’s deep pockets.

“The primary effect on Fitbit users will be unseen,” said Roger L.
Kay, principal analyst at Endpoint Technologies Associates.

“Google is a smart company, and they’ll likely do some innovating that
makes it into the Fitbit products over time,” he told TechNewsWorld. “Perhaps AI will be one of those.”

Most importantly, Google will likely want to keep the Fitbit brand
because it already has a solid market presence and is second only to
the Apple Watch in the wearables category explained Kay.

The look of Fitbit could change under the new ownership — at least to
create something resembling synergy with Google.

“Device form factors will merge with more Google software in and
around Fitbit’s, and better health and exercise data for Pixel Watch,”
said Roger Entner, principal analyst at Recon Analytics.

Data Collection

A far bigger factor to consider is that Google will have a lot of
data from those 28 million users. Fitbit’s privacy policy indicates that
Google could gain access to name, email, date of birth, gender,
fitness goals, and even height and weight.

Consumer trust is among its most paramount
tenets, Fitbit has said, with strong privacy and
security guidelines built into its DNA. The acquisition will not change that, according to the company, which promised that Fitbit health and
wellness data will not be used for Google ads.

Google may have other plans in mind, of course, especially over the long haul.

“Google will integrate Fitbit into its data collection and analysis
universe,” Entner told TechNewsWorld.

“The devices will become more interoperable with Android,” he predicted, adding that the trackers probably will become more powerful in terms of data collection and analysis.

Users’ data “will be aggregated with everything else Google has on
them and monetized however possible,” said Kay. “The front end should look about the same, and the larger question of whether people should worry about what Google knows about them is a bit of a door-slam after the horse has already bolted.”

Google — or more importantly Alphabet — may have branched out into a
plethora of businesses, including the development of autonomous
vehicles, but its core business is still based on selling online ads.

“Which is about collecting, cross referencing and publishing data,”
said Tellus Venture Associates’ Blum.

“Fitbit collects a tremendous amount of data from its users, and
Google will want to mash it all up with geo-referencing, email, search
history and every other kind of data it has,” he added.

“Most users probably won’t care, and probably will see benefit from
the kind of cross-referencing Google can do — with health data, for
example,” Blum noted. “Some users won’t like that at all. If Google is
transparent about what it’s doing, and follows the kind of procedures
that the new California Consumer Privacy Act mandates, there shouldn’t
be a problem. That’s a big if, though.”

Getting Personal

The issue really isn’t about the collection of data, as Fitbit already has accumulated a big stash of data from its users. The change is that Google soon could have access to it.

“Most people paid no attention over the past 15 year or so as Google
created a composite digital twin of everyone, certainly in the United
States and many other places as well,” said Kay.

Still, if this is the case, it could result in some customers leaving the
Fitbit ecosystem.

“The people who don’t care where their data goes will not mind Google,
and those who do are — or will be — with Apple,” added Recon Analytics’
Entner.

For some the fact that any company may have access to such highly
personal information may remain a deal breaker in the wearables
category.

“I already drew the line personally at smart assistants,” said
Endpoint Technologies Associates’ Kay.

“I don’t want live microphones in my house with unknown lurkers on the
other end, and fitness tracking is even more intrusive and I’m
definitely not down for that,” he said bluntly. “Obviously others
disagree, and the health side of personal trackers can be genuinely
useful. It’s quite possible that in the future I’ll be forced to wear
one because my doctor or insurance company insists.”


Peter Suciu has been an ECT News Network reporter since 2012. His areas of focus include cybersecurity, mobile phones, displays, streaming media, pay TV and autonomous vehicles. He has written and edited for numerous publications and websites, including Newsweek, Wired and FoxNews.com.
Email Peter.

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