Google's Fitbit buy: Why customer engagement rather than advertising is on the cards

Recently, Google's US$2.1bn acquisition of Fitbit drew a fair bit of chatter online, with many lauding the move as Google big push into wearables technology devices market, going head to head against the likes of Apple Watch. It also marked Google's ability to now get one step closer to consumer's personal and health related data. Anticipating the questions that could arise around data security and privacy post the acquisition, Rick Osterloh, Google's SVP, devices and services, said in a blog post that privacy and security were paramount to helping consumers live healthier, more active lives.

"We will never sell personal information to anyone. Fitbit health and wellness data will not be used for Google ads," he said, adding:

"When you use our products, you?re trusting Google with your information. We understand this is a big responsibility and we work hard to protect your information, put you in control and give you transparency about your data," he said. Osterloh added that similar to its other products, with wearables, it will be transparent about the data it collects and why.

Fitbit also previously assured users that?it will continue to?put them in control of their data and will remain transparent about the data it collects and why. It too, added that the company never sells personal information, and Fitbit health and wellness data will not be used for Google ads.

Despite the case, some users remained uneasy about the prospect of their health related data being gobbled up by Google.

Now do one thing, wear a whole body condom so that u can have ur "Privacy" secured to some extent

? #GauravPradhan (@DrGPradhan)

Google already has way too much power. It should not be allowed to buy Fitbit.

? Zephyr Teachout (@ZephyrTeachout) November 3, 2019

You think they did that so they could help you run more?

THEY WANT YOUR DATA

? Parker Nathans (@parknathans) November 5, 2019

? Dan Benjamin (@danbenjamin) November 2, 2019

This is not Google's first foray into the wearables market, having produced health tracking platform Google Fit and an operating system for smartwatches and other wearables known as Wear OS. It also currently has access to health science data as its parent company Alphabet owns research organisation Verily Life Sciences.

According to Forrester's senior analyst Jeff Becker, smartwatch sales will surpass those of fitness trackers in 2020, with Apple Watch being the market leader. Becker added that only 25% of consumers currently trust Google to protect their data and if the company aims to catch up, it is imperative for Google to address broader data privacy concerns that are widespread among consumers. "If Google can do this, it will find ample opportunity in healthcare," Becker said.

Meanwhile in a statement to?Marketing,?Alan Antin, senior research director at Gartner said data from Fitbit products are protected by their terms and conditions and end-user agreements. While it is possible that such terms will be modified in the future, users typically have an opportunity to re-consent in the event of such a change.

He added that consumer technology brands?take seriously the importance of protecting privacy. In the current environment, these concerns are amplified as governmental bodies look more closely at data practices and uses.

"Google has been clear that it will not sell advertising based on wearable user data. With so much light on this topic already, I?d expect Google to take extra measures to ensure privacy and assuage these concerns," he said. If anything, he added that Google would want to use anonymised activity data to develop digital health coaching or other AI in a future generation of products and services. Such a developmental effort, however, will not involve any individual privacy risk, Antin said.

Nonetheless, what will remain a challenge for Google will be to allay fears that consumers' data will not be used for advertising as that forms its core search business. Also, there is a segment of sceptical consumers who simply would not trust tech companies no matter the realities.

"Google must keep re-iterating that it is not going to target ads to users based on health and wellness data coming from their wearable products," Antin said.

According to Antin, while some consumers might not get past the advertising concern no matter what the company says or does, Google can still mitigate this hurdle by?sticking to its word and not advertising based on the wearables data.

Google unlikely to violate its promise

One individual who is not too concerned about the acquisition is?Shiv Choudhury, MD and partner, Boston Consulting Group Singapore, leader of the consumer and retail practice in ASEAN. He told?Marketing that Fitbit currently has limited health data and it would be no different than Apple Watch users giving their data to Apple. According to him, most markets require an opt-in from consumers for access to their data, so he does not believe that Google acquiring Fitbit will change that.

"When we work on client large data programmes, we take the utmost care to remove personal identifiable information into a separate data structure or place so there is lowered risk. I?m sure that Google or Fitbit would also consider that if they don?t already," Choudhury said. He added that Google's business model is to serve relevant information to consumers based on what they know of them. Thus, they would be relying on Fitbit data to help enrich the quality of their existing data.

That said, every concerned consumer should first know what they are signing away. Choudhury added:

Agreeing with?Choudhury is?Justin Peyton, chief strategy and transformation officer, Wunderman Thompson APAC who said Google will remain bound by the terms and conditions agreed to by Fitbit and "it is?unlikely that Google would violate their promise to not use the data for individual advertising".

Like other tech companies, Google is increasingly focused on showing the consumer that its products actually protect privacy. And while concern may be warranted, its assurance to separate personal health data from their advertising business should provide some level of comfort, Peyton added.

"I am not sure it can do much more than it already has done for now. The key moment will be when it releases the first co-branded or Google branded products at which point it will likely want to reinforce the message that health tech devices and data exist outside of its advertising ecosystem," Peyton explained. He added that the value of the data is likely less about the individual and more about the scale and the type of data. With about 28 million active Fitbit users and historical data,? Google will now have a foundation from which to?extract scaled insights about health and behaviour, thereby offering the company a foundation from which to launch into the US$20 billion health tech space.

"Following Amazon?s recent announcement and purchases in the healthcare space, the acquisition of Fitbit and its associated data may just be Google?s announcement of health tech as a significant future focus," Peyton added.

Consumers should adopt a different view

Much of the conversation has been quite negative about how Google would exploit the data, said?Riku Vassinen, managing partner, Ogilvy Africa, who urged consumers to look at this news from another point of view - which is how wearable health data can benefit them.

"When combining that data with good science backed AI, it can be very valuable tool to improve your health," Vassinen said. He added that as the health data points increase and become more widely available, the more consumers can use them to guide their behaviour towards a healthier life and even live longer.

"All the big tech companies - Google, Facebook, Amazon, and even Apple in China - have been embroiled in some sort of data privacy scandal. I would not be worried more than usual about this acquisition," he said. Vassinen explained:

In that way, users' Fitbit data should be safer than before. On the other hand, it is also a known fact that these tech companies "already have too much data" about consumers and "use it in evil ways", Vassinen said. As such, Google will know a lot about a consumer when combining one's behavioural data on the Internet with health data.

He added that while?Google clarified it will not use Fitbit data to target ads, "naturally there are other ways to monetise that data".?Nonetheless, Vassinen explained that if Google's word about not using wearable health data in advertising does not convince consumers, it tells more about their current attitude against these [tech] companies.

Acquisition creates a consumer engagement strategy

Meanwhile, Forrester's Becker said?the acquisition shows that Google recognises it is unable to be a player in the healthcare scene without a consumer engagement strategy. In 2011, Google shut its inaugural patient portal Google Health due to limited user interest three years after the launch. Since then, the company has concentrated its healthcare goals on producing AI that solves healthcare business problems, "largely sidestepping" the need to directly reach out to healthcare consumers.

The acquisition now means that Google will be a one-stop shop for healthcare organisations (HCOs) when it comes to consumer data capture and AI-generated health and wellness insights. Becker expects the number of healthcare visits to increase as consumers will receive more clinical alerts from Google, which is expected to follow in the footsteps of Apple and Samsung of delivering such alerts to users. HCOs will also have streaming access to patient-generated health data insights, as data scientists at Google work to produce valuable insights from Fitbit's streaming data, he added.

Meanwhile, Ogilvy's Vassinen added that?the acquisition will enable a creation of a flagship Google wearable product - much like its Pixel smartphone - that can compete head on with the Apple Watch, as well as improve Google's wearable software.

Besides the software, another area that Google will see a boost in as a result of the acquisition is the B2B aspect. Vassinen explained that Fitbit has deals with health insurance companies, corporate wellness programmes, and even the Singapore's statutory boards such as the Health Promotion Board. "In the long term, this B2B side of Fitbit can be an even more profitable part of the business," he said. Nonetheless, Vassinen said that in theory, the acquisition should?strengthen Google's position in the wearables market drastically, and give Fitbit even more firepower as well. In reality, however, it will be more challenging.

"Apple is the obvious market leader in volume and market share in wearables, but lower-priced competitors have surpassed Fitbit already in shipments. So Fitbit is not currently the best or the cheapest in the market. The middle is always hard place to be," he explained. Vassinen said it also remains?to be seen how Fitbit will be integrated to Google and its existing Wear OS team. The track record for these integrations has not always been particularly great for Google, he added.

(Photo courtesy: Fitbit's Facebook page)