Google buys Fitbit
FITBIT IS being acquired by Google for about US$2.1 billion, a deal that enables the Internet company to step back into the hotly contested market for smartwatches and health and fitness trackers.
Fitbit is a pioneer in wearable technology, but it’s been shredded by that competition. Its market capitalisation soared to just under US$10 billion after becoming a public company in 2015. Its value this week is well below US$2 billion.
Google has struggled to stake out a presence in the wearables market. It’s been developing Wear OS software for other manufacturers to build wearable devices, but they haven’t gained much traction in the face of competition from Fitbit, Apple, Samsung, and others. The deal to buy Fitbit could give Google a needed boost.
“Google doesn’t want to be left out of the party,” said analyst Daniel Ives of Wedbush Securities. “If you look at what Apple has done with wearables, it a missing piece of the puzzle for Google.”
Fitbit said that its privacy and security guidelines won’t change and that it will continue to be transparent about the data it collects and why. Fitbit said that it never sells personal information and that its health and wellness data will not be used for the advertisements that drive Google’s main business.
Fitbit’s privacy policy says data it collects include a user’s date of birth, gender, height, and weight, and for some users, it also stores logs tracking their food and water intake, as well as sleep and female health patterns.
But Google’s promise not to sell ads based on health data won’t likely stop it from sucking up other personal data from Fitbit devices. Fitbit also has GPS models that could track users’ locations. That could help Google know that a runner stopped at a coffee shop on the way back, allowing it to then display ads for rival coffee shops.
More important, having a Google device on the wrist could drive its wearers to use Google services even more – giving Google more ways to collect data and sell ads.
Fitbit has 28 million active users worldwide and has sold more than 100 million devices. When rumours of a potential buyout by Google surfaced earlier this week, Fitbit shares soared almost 30 per cent. The stock jumped another 15per cent in morning trading Friday.
Alphabet said it will pay US$7.35 per share for the company, which were trading at US$7.20 each after the deal was announced. Alphabet shares gained less than 1 per cent in morning trading.
“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,” Fitbit co-founder and CEO James Park said in a statement.
The deal is expected to close next year if approved by regulators and Fitbit shareholders.