Wearable fitness products company Fitbit Inc. announced Friday it entered a definitive agreement to be acquired by Alphabet Inc.-owned Google for $7.35 per share in cash, valuing the company at approximately $2.1 billion. James Park, co-founder and CEO of Fitbit, said of the deal: “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.” The deal is expected to close in 2020.

Google acquires  Wearable fitness products company Fitbit Inc for $2.1 billion

Founded in 2007, Fitbit launched its step-counting Fitbit Tracker at the end of 2009. The wearables market has grown rapidly in the past decade. According to IDS, Apple leads the wearables market with 16.2 million devices sold in the 4Q18, followed by Xiaomi, Huawei, Fitbit, and Samsung. Google’s presence in wearables includes WearOS.

“This move should put the eHealth market on alert—Google just acquired 25-30 million active users who care about monitoring their health. This is exactly the demographic that eHealth is designed to reach. And I would say that ‘preventative health’ within eHealth just got more competitive.” – Michael Luther, Co-Founder and CEO of MX3 Diagnostics

This year Fitbit sought to diversify its income stream by working with health care companies and offering subscription-based services. Some analysts see the Fitbit acquisition as a data play on Google’s part. Tom Taulli of InvestorPlace notes: “Google is a global leader in AI and this technology will likely prove extremely useful in transforming the healthcare industry.” Omri Shor, CEO of Medisafe notes: “Quality AI is predicated on an abundance of validated data, the tools to analyze that data in a meaningful way, and the ability to drive action.

Google and FitBit together certainly have the potential to develop groundbreaking AI.” D.A. Davidson’s Tom Forte agrees and said in a note to clients “We see Google as a natural acquirer for the company that would leverage Fitbit’s: 1) data, 2) hardware and 3) brand into a larger ecosystem that would allow Google to further penetrate the healthcare sector and the smartwatch category.”

According to cbc, Fitbit has 28 million active users worldwide and has sold more than 100 million devices. The company 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, weight, and for some users it also stores logs tracking their food and water intake, as well as sleep and female health patterns.

The deal is expected to close next year if approved by regulators and Fitbit shareholders.

Ives said it will likely face additional scrutiny at a time when federal antitrust enforcers and Congress have launched broad investigations into the market dominance of Google and other major tech companies.

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