Google consents to purchase Fitbit in $2.1B offer to assist increase Wear OS

Google’s moms and dad business Alphabet consented to buy Fitbit in an offer that values the wearable maker at around $2.1 billion, Google revealed Friday. In revealing the deal the business verified a Monday report that Alphabet “made an offer” to purchase the wearable business.

Fitbit lags physical fitness trackers such as the Versa 2 smartwatch and the Charge 3 band, which work with both Apple’s iOS and Google’s Android os (whereas the Apple Watch is iOS-only). 

Google is hoping the relocation will assist reinforce its Wear OS wearable efforts. Introduced in 2015, WearOS was developed to assist Google bring Android into items such as smartwatches and physical fitness trackers, comparable to how WatchOS has actually assisted Apple broaden iOS. Unlike the Apple Watch, nevertheless, Google’s platform has actually stopped working so far to capture on with customers, regardless of bring in a host of prominent partners such as Tag Heuer, Fossil, Michael Kors and Movado.

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Why Google could use Fitbit

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In a blog post announcing the deal, Rick Osterloh, Google’s senior vice president of devices and services, praised Fitbit while teasing what the announcement will bring. 

“Over the years, Google has made progress with partners in this space with Wear OS and Google Fit, but we see an opportunity to invest even more in Wear OS as well as introduce Made by Google wearable devices into the market,” Osterloh writes.

“Fitbit has been a true pioneer in the industry and has created engaging products, experiences and a vibrant community of users. By working closely with Fitbit’s team of experts, and bringing together the best AI, software and hardware, we can help spur innovation in wearables and build products to benefit even more people around the world.”

In a press release, Fitbit says it expects the deal to close in 2020. In the same message, the company also reaffirmed that it “never sells personal information, and Fitbit health and wellness data will not be used for Google ads.”

“Google has been making software for watch companies but has not built its own hardware,” says Techsponential lead analyst Avi Greengart. “Buying Fitbit gives Google instant reach in wearables, but does not guarantee more competitive smartwatches — Google needs better silicon for that.” 

While Fitbit’s software is “solid … it will be interesting to see how long Google keeps Fitbit separate or if it tries to integrate its apps into Android,” Greengart adds. He notes while Google’s promise on user data “is promising,” the company’s “users will have to trust that it stays that way.”

Alphabet released a sluggish financial report Monday, with $40.49 billion in sales, exceeding analysts’ estimate of $40.32 billion, and earnings per share of $10.12, below the expected $12.42 per share. 

We can expect to see Fitbit’s third-quarter earnings report on Nov. 6, the company said last month.

Putting a dampener on the news for Google, however, House Antitrust Subcommittee Chair David Cicilline later Friday said the acquisition announcement has triggered more antitrust concerns as the tech giant’s “dominance” is already being investigated.

“By attempting this deal at this moment, Google is signaling that it will continue to flex and expand its power in spite of this immense scrutiny,” Cicilline said in a statement. The acquisition would also give Google “deep insights into Americans’ most sensitive information,” including health and location data, according to Cicilline.

“This proposed transaction … deserves an immediate and thorough investigation,” he said.

Texas Attorney General Ken Paxton had announced an antitrust investigation into Google’s massive online advertising business in September. The probe has the participation of attorneys general from 48 states, the District of Columbia and Puerto Rico. This followed Google in July confirming that it was under investigation by the Justice Department for antitrust concerns.

Originally published at 3:24 a.m. PT on Nov. 1.
Update, 7:59 a.m. PT: Adds additional information and analyst insight; Update, 1:37 p.m. PT: Adds comment from Cicilline, detail on antitrust investigations.