Google LLC, Mountain View, California, has entered into an agreement to acquire Fitbit, San Francisco, for $2.1 billion, the companies announced Nov. 1. The deal is expected to close on a to-be-determined date in 2020.
"Fitbit has been a true pioneer in the industry and has created terrific products, experiences and a vibrant community of users," Rick Osterloh, senior vice president of devices and services at Google, said in a media release. "We're looking forward to working with the incredible talent at Fitbit and bringing together the best hardware, software and AI to build wearables to help even more people around the world."
The acquisition is an expansion of Fitbit's ongoing partnership with Google that centers around Fitbit's utilization of Google's Cloud Health interface to further integrate its services into the healthcare sector, such as connecting a user's data with electronic medical records. Fitbit also hosts its services on the Google Cloud Platform.
Fitbit CEO James Park said the partnership would "define the next generation of healthcare and wearables" when it was first announced in April 2018.
"Working with Google gives us an opportunity to transform how we scale our business, allowing us to reach more people around the world faster, while also enhancing the experience we offer to our users and the healthcare system,” Park said. “This collaboration will accelerate the pace of innovation to define the next generation of healthcare and wearables.”
In the release, Park also emphasized that the brand's commitments to privacy and security will remain top priorities under Google leadership and that Fitbit will never sell or incorporate its user data into Google ads.
Fitbit reported 2018 year-end revenue of $1.51 billion, representing a year-to-year decrease of 6.7 percent and the brand's third consecutive year of revenue decline. However, its user base grew by 9 percent during the year to 27.6 million.
More recently, Fitbit reported $313.6 million in 2019 second quarter revenue and 3.5 million devices sold, year-over-year increases of 4 percent and 29 percent. As of July 31, 2019, the brand was targeting between $1.43 billion and $1.48 billion in 2019 year-end revenue.
Google's parent entity, Alphabet Inc., is valued at approximately $137 billion. Other notable Google subsidiaries include video-sharing platform YouTube, mobile operating system Android and GPS software Waze.
"[E]ven though there’s a chance that Google’s plan to buy Fitbit may not pass muster with regulators, it is possible that there might even be some upside to having massive tech companies become the central repositories for our daily health stats," Senior Writer Lauren Goode said in a Nov. 2 column in Wired. "Google owning a successful wearable brand could allow it to compete more effectively with Apple. So far, Google has tried to edge into [Silicon Valley's] wearable share by licensing out its WearOS software to fashion brands, or by acquiring part of Fossil’s business. Neither strategy has made a huge dent. But now that Google will control both the software and the hardware on whatever new wrist-computers bloom from this acquisition, it's likely that its Android-powered smartwatches are going to become that much smarter.
For the deal, Qatalyst Partners LLP acted as Fitbit’s financial advisor and Fenwick & West LLP acted as its legal advisor.