Google has strengthened its capabilities in the wearables segment by taking over Fitbit at a cost said to be in the vicinity of $2.1 billion. With the smartwatch brand Fossil already in its camp, battle lines may be well and truly drawn between Google and Apple in the fitness tracker and health and wellness areas. It is expected that the transaction may be completed only by next year, but the details of the deal are out.
The announcement resulted in the stocks of both the companies being quoted higher, though Fitbit’s by a decent 16%. Google has agreed to pay $7.35 a share. The Fitbit stock has had some handsome gains in the week taking its market cap to $1.5 billion.
Google has made a public announcement through a blog post describing how this new acquisition will help Google leverage its Wear OS, the operating system for wearables. Google wants to make more wearables to enlarge the user base and apply the latest AI and other technologies for this. The effort, going ahead will be to integrate the technology Fitbit has already developed, into the work Google has done in the field. At this point, it is not clear if Google will retain the Fitbit brand name since the Fossil brand is also available in the kitty.
The one issue Google will have to overcome, is related to the data being collected through the wearables. While there is already hue and cry over the manner in which the company has been collecting personal data through its various applications and how it uses them for its advertising purposes, the fitness tracking products will end up collecting more sensitive information of the users. Google has said it will not use health and wellness data from Fitbit for its ads.
Google’s detractors and anti-trust campaigners are not however amused at Google acquiring Fitbit. They started their campaign when Google annexed Fossil. Now, with the Fitbit takeover announcement, more voices can be heard in the US and elsewhere against it.
Apple has had a tight hold on the wearables market with its Apple Watch accounting for around 50% of all smartwatches sold. Google may offer stiff competition in the months and years to follow.