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Google taps fitness tracker market with $3b bid for Fitbit


Xiaomi dominates the global wearables market, with a 17.3 per cent market share in the second quarter of 2019, followed by Apple. Fitbit owns 10 per cent of the market, according to data from market research firm International Data.

Reuters first reported the deal on Monday.

Fitbit, which helped pioneer the wearable devices craze, has been partnering with health insurers and has been making tuck-in acquisitions in the healthcare market, as part of efforts to diversify its revenue stream. Analysts have said that much of the company’s value may now lie in its health data.

US antitrust regulators have little reason to oppose Alphabet’s plans to buy Fitbit, but that does not mean that US officials, backed by a bevy of anti-Google lawmakers, will not give the proposed purchase extra scrutiny.

Google is already under antitrust investigation by the Justice Department, the US House of Representatives Judiciary Committee and dozens of state attorneys general for allegedly using its massive market power to crush smaller competitors.

Fitbit has raised privacy concerns in the past: In 2011, the sexual activity of people using the health and fitness tracker was found to be publicly accessible online.

The company said on Friday that its users’ health and wellness data would not be used for Google ads. Google said in a blog post that it would give Fitbit users the choice to review, move or delete their data.

Google, which has been defending its privacy practices after a number of regulatory probes, said it would be transparent about the data it collects for its devices and would not sell that data.

Fitbit brings to the deal partnerships it has struck with some large drug companies. In October, Fitbit announced a collaboration with Bristol-Myers  and Pfizer on early detection of irregular heartbeat, or atrial fibrillation, on its devices.

Fitbit in August also launched its latest smart watch, Versa 2, adding Amazon’s voice assistant Alexa, online payments and music storage to the device’s capabilities.

Fitbit has been offered $US7.35 per share in cash, the company said, a premium of about 19 per cent to the stock’s closing price on Thursday. The company’s shares were trading up 15 per cent at $US7.11 in New York on Friday. Shares of Alphabet were nearly flat at $US1,263.18.

The company’s shares have gained more than 40 per cent since Reuters reported on Monday that Google had made an offer for Fitbit.

Qatalyst Partners LLP was financial adviser to Fitbit on the deal, which is expected to close in 2020. Fenwick & West LLP was the legal adviser.

Reuters



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