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After more than a month of rumors and speculation, Google purchased Fitbit at $7.35 per share on Friday, catapulting the wearable maker to a $2.1 billion valuation. Fitbit struggled with falling revenue in recent years as Apple increasingly gobbled up more of the global wearables market, though the company reversed its fortune somewhat in Q1 2019, posting 10% year-over-year (YoY) revenue growth.
Business Insider Intelligence attributed this shift to a renewed focus on Fitbit’s health services segment, namely the expansion of its employee health coaching and benefits services through Fitbit Health Solutions — which Google now gains access to, giving it an inroad to the massive employer-sponsored insurance market: More than 160 million US consumers receive their health insurance coverage through their employer.
As Google enters the employee benefits space, it can differentiate through one of its biggest strengths: data analytics:
- Google’s ability to aggregate and analyze millions of points of data could be a huge value-add in the healthcare sector, as it can empower predictive analytics and fuel personalized health interventions. This competitive edge has enabled Google Cloud to make major inroads as an enterprise tech contractor for healthcare organizations — and we could see the company make similar strides in the employee benefits space. For example, by funneling user-generated health data through its cloud-based analytics systems, Google could build upon Fitbit’s recently announced Fitbit Premium subscription service, which provides users with personalized health advice and targeted wellness programs, to cover a wider range of health issues.
- And with employer health spending on the rise, Google could further edge out the competition by leveraging its data prowess to help lower the costs of care for people living with a chronic illness. US employers are set to experience a 6% jump in medical costs next year — nearly double the rate of inflation — which could provide a growth window for innovative digital health companies capable of driving down costs of care. And chronic health conditions like diabetes are likely a major factor in these rising costs, as chronic disease accounts for 90% of the US’ $3.7 trillion in healthcare spending. So, if Google was able to leverage heart health data, fitness tracking information, sleep cycles, and more from Fitbit’s millions of users, it’s possible that the tech giant could generate significant savings through AI-powered predictive interventions, as we’ve seen Google achieve favorable results in its current AI-powered predictive care projects: Earlier this year, Google subsidiary DeepMind announced its machine learning algorithm was capable of accurately predicting 90% of acute kidney injuries 48 hours before symptoms could be recognized by doctors using information gleaned from patient EHRs, for instance.
But Google and Fitbit will need to navigate consumer trust concerns regarding how private health data will be utilized by the tech giant. There are already concerns cropping up on Twitter about what Fitbit’s acquisition will mean for users’ health data. Notably, Deputy Leader of the UK’s Labour Party called the acquisition a “data grab” on the part of Google and has written to the country’s Competition and Markets Authority (CMA) asking the regulatory agency to halt the acquisition pending the results of a full investigation carried out with “the most rigorous possible scrutiny.”
For their parts, Fitbit and Google both stated in their announcements that user data would never be sold to third parties, that Fitbit data would not be used to develop Google Ads, and Google’s SVP of Devices & Services Rick Osterloh went so far as to say that Fitbit users would have the power to “review, move, or delete their data.”
It’s unclear what that process would entail and how much power users will have over how their data is used, but Google and Fitbit will want to do all they can to assuage customer fears — which are no doubt fueled by the tech giant’s rocky history with health data privacy standards.
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