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3 Key Takeaways from Google’s Fitbit Acquisition

November 1, 2019, 7:47 PM UTC

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Happy Friday, readers.

Google (and parent Alphabet) are ending the week on a big note—the company is snapping up wearables platform Fitbit in a $2.1 billion acquisition. My colleague Aaron Pressman expertly explains the deal dynamics and its implications for the wearables and smartwatch market.

Some of the key drivers here, beyond an expansion into a wearables business that Google has struggled with (I encourage you to read Aaron’s piece about that), include the company’s forays into health research—as well as an increased presence in the employer health insurance market. Here are some of the major takeaways.

Google Is Already Delving Into Health Research. This Acquisition Should Help.

Project Baseline” made headlines years ago when it was initially announced. It’s an ambitious project between Google/Alphabet’s life sciences arm Verily in conjunction with Stanford’s and Duke’s medical schools, as well as the American Heart Association (AHA). The multi-year study aims to round up health data, with the help of wearable devices, in order to create a baseline map of human health.

This is an ambitious, and somewhat nebulous, endeavor meant (eventually) to create personalized health recommendations in order to prevent disease. And carrying it out successfully could require a whole bunch of data collection—heart rates, steps walked in a day, sleep patterns, and whatever else you could glean from, say, a device attached to your wrist.

Google is likely hoping that a democratized strategy that employs a well-known consumer product can help the company on this front. (Oh, and Google and Fitbit have been in talks over data collaboration for a while now.)

The Deal Will Further Entrench Google With Employers and Health Insurers.

Here’s another interesting element to the M&A—Google is already intimately involved with the corporate sector with services such as G Suite and Google Cloud. But so is Fitbit.

I’ve spoken with Fitbit CEO James Park a number of times, and he’s always been enthusiastic about extending his company’s brand to major employers. One of the biggest pushes has been getting Fitbit devices into corporate wellness programs.

For instance, Fitbit devices are part of health insurance giant UnitedHealthcare’s Motion Program—an initiative which gives employees with high-deductible health care plans financial incentives for meeting certain step- and health-goals over a given time period. Using these devices to reach the activity goals could funnel cash into eligible employees’ HRAs or HSAs.

This Is a Key Test Case in Tech Companies’ Relevance in the Health Care Field.

Tech companies have been delving into medicine for several years. But the urgency seems to have picked up.

There are endless examples, from Amazon to Apple to Microsoft to Google, of hip technology firms swerving into the health care lane. But while companies like Apple are relying on their own devices (the Apple Watch is a key component in multiple, major health care research projects), Google has now decided to outsource the innovation in a crowded marketplace.

The bolt-on acquisition is a serious gamble (and consumers may have more privacy concerns about a massive corporation like Google than a standalone like Fitbit)—but what seems clear is that the gold rush for health data is marching strong.

Read on for the day’s news, and have a wonderful weekend.

Sy Mukherjee, @the_sy_guy, sayak.mukherjee@fortune.com

DIGITAL HEALTH

Your muscles pictured, courtesy of A.I. A new study suggests that A.I. can paint a better picture of muscoloskeletal health—aka, how your bones and muscles are doing at any given point. The model created by Japanese researchers can reportedly layer out individual muscle segments for more precise analysis. "This segmentation was time consuming and depended on expert-knowledge," said Yoshinobu Sato, the NAIST professor who led the study, in a statement. "We used deep learning to automate the segmentation of individual muscles to generate a musculoskeletal model that is personalized to the patient."(Fortune)

INDICATIONS

Novartis falls short in anti-inflammatory war against AbbVie. AbbVie is the undeniable titan in the anti-flammatory space (readers may remember my piece on how they've achieved this dominance on both a scientific and marketing level from a few months ago). Fellow drug giant Novartis took a shot across the bow in a certain form of arthritis—and appears to have come up short. Novartis' Cosentyx didn't produce the strong results against AbbVie's Humira (the best-selling drug in the world) in psoriatic arthritis that the compay hoped it would, the firm announced Friday. Novartis executives still sounded an optimistic note. "We view the results as confirming our vision of Cosentyx becoming standard of care in psoriatic arthritis," said Eric Hughes, the company's head of development in immunology, hepatology and dermatology.

THE BIG PICTURE

A $20.5 trillion Medicare-for-All plan. Democratic presidential contented Sen. Elizabeth Warren has released a long-awaited financing plan for her Medicare-for-All, universal health coverage proposal. The key (and controversial) claim here is that a multi-trillion dollar plan would ultimately be cost-effective given how disparate and expensive current U.S. health care is (for instance, private insurance premiums would be replaced by taxes, but it would add up to long-term savings, according to Warren). (Reuters)

REQUIRED READING

Why Google Is Buying Fitbitby Aaron Pressman

Why China's Digital Currency Is a 'Wake-Up Call' for the U.S.by Naomi Xu Elegant

How Men Approach Money Differently Today Than Ever Beforeby Cleo Stiller

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