Google’s Fitbit purchase could reshape its healthcare ambitions

Google has reached into parent company Alphabet’s $121 billion cash reserves to spend $2.1 billion on Fitbit, a move into the key consumer health market that places them in more direct competition with rival Apple.

For more than a year, Ftibit and Google have partnered on healthcare applications; last April, Fitbit announced that it would work with Google’s application programming interface to connect data with electronic medical records via Google’s Cloud Healthcare API. That move followed Fitbit’s February 2018 acquisition of Twine Health, which gave the wearables company a consumer health platform which complied with existing federal regulations.

“Working with Google gives us an opportunity to transform how we scale our business, allowing us to reach more people around the world faster, while also enhancing the experience we offer to our users and the healthcare system,” said Fitbit CEO and co-founder James Park at the time of the 2018 Google partnership.

Companies throughout the healthcare industry are pushing to get closer to patients, and wearables have opened a new window into their health. Additionally, the technology can potentially encourage patients to pursue preventive healthcare measures, rather than seeking care after they’re ill.

“All of us… we’re pursuing the same thing,” said a prominent healthcare executive at a multinational medical device manufacturer. “We see a healthcare system that’s highly inefficient with a lot of waste that is very much episode-related, where we all know health is dynamic and continuous.” Gaining “better insight into health and disease drivers and interventions at the right place and the right time is the holy grail.”

Privacy concerns abound

The biggest challenge for Alphabet and Google with this acquisition is privacy; the company has already faced massive criticism for its push into healthcare in the U.K. regarding concerns about how it would handle sensitive health information. The technology industry’s habit of releasing minimum viable products doesn’t work in an industry where complications can literally become a matter of life and death.

Sensing inevitable concern around Google’s upcoming access to a bevy of health data, Rick Osterloh, Google’s SVP for devices and services, offered that the company will not use user information for advertising. “We will never sell personal information to anyone,” he wrote. “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.”

Competition with Apple

Those privacy concerns stand in direct contrast to the obvious competitor driving this acquisition forward — Apple. The Cupertino-based king of consumer hardware has set itself apart from other consumer tech companies through its professed emphasis on privacy, a position that Apple will likely leverage further as it continues to make deeper forays into health.

Initially, the Fitibit acquisition is all about providing a credible competitor to the Apple Watch; Apple owns half of the smartwatch market in the U.S. and Google has never offered a credible competitor. And increasingly, the Apple Watch’s pitch to consumers is around its ability to monitor healthcare.

Earlier this month, Fitibit announced a partnership with the Bristol-Myers Squibb Healthcare Alliance to develop technologies designed to detect heart arrhythmias, an announcement designed to match Apple’s very compelling heartbeat-detection feature.

Alphabet’s other hardware plays

That’s not to say that Alphabet doesn’t have a healthcare wearable of its own. Under the auspices of its Verily subsidiary, Alphabet developed the Study Watch, which collects health data from various sensors and feeds information back to researchers for clinical trials. The company hasn’t said whether the technology has been made publicly available in a consumer device yet, but Fitbit could be a natural integration partner.

However, the problem with a lot of this data is that it’s not easy for doctors to access or integrate with other healthcare records managed by legacy data providers in hospitals and healthcare networks.

Google has been trying to break through to the clinical market — initially through work that its artificial intelligence subsidiary DeepMind was doing with the U.K.’s National Institutes of Health.

The Streams family of applications now represents Google Health’s foray into clinical patient data handling, electronic health records and predictive preventive medicine. It has been Alphabet’s beachhead into doctors’ offices and — if Fitbit data can be integrated into the health records — a potentially powerful argument or consumers to take their old Fitbits out of drawers, or pick up a new device.

Healthcare is all about data

Taking a step back, the bid for Fitbit is simply one more step for Google (and its parent company) to play a larger role in the trillion-dollar healthcare industry.

For Alphabet (and Google), the move into healthcare begins and ends with data. Google’s suite of services (like Microsoft’s Azure and Amazon Web Services) is compliant with the Health Insurance Portability and Accountability Act of 1996, which laid much of the groundwork for today’s modern digital healthcare framework.

Data management alone is a huge business for healthcare service providers, but Google and Alphabet don’t just want to manage information, they want to help integrate and interpret as well, which means taking patient data and putting it into portable, easily understandable data formats so information can be shared among different clinicians to get a more full view of a patient’s health. Here, artificial intelligence tools come into play that can ingest information from different diagnostics, help identify conditions and suggest potential courses of treatment.

Those diagnostics could come from a range of devices made by Google — or Alphabet’s other healthcare subsidiaries — or other companies that have partnered with the technology giant. Google’s Nest division has been pitching its personal digital assistants as a complement to monitoring devices in nursing homes and hospitals. Fitibits are collecting a range of health data that are already integrated into Google’s Cloud platform (thanks to the partnership announced one year ago).

“By enabling Fitbit to connect and manage key health and fitness data using our Google Cloud Healthcare API, we are getting one step closer to this goal,” said Dr. Gregory Moore, VP Google, Google Cloud Healthcare & Life Sciences, in a statement at the time of the Fitbit announcement. “Together, we have the opportunity to deliver up-to-date information to providers, enhancing their ability to follow and manage the health of their patients and guide their treatment.”