Shares of Fitbit (FIT +0.00%) rallied 5% on April 30 after the company revealed plans to link its devices to Alphabet's (GOOG 0.84%) (GOOGL 0.73%) new Google Cloud for Healthcare API. Google's new platform will let medical professionals store and access data in its cloud for health, medicine, and research projects.
By tethering its devices to Google Cloud, Fitbit could make it easier for its users to share their health data with doctors. That move would complement Fitbit's recent acquisition of Twine Health, another cloud-based healthcare platform that tracks chronic diseases and connects patients to health coaches and doctors.
Image source: Fitbit.
That sounds like a promising move, but linking a wearable device directly to a healthcare provider via the cloud isn't a new idea. The concept also faces resistance from medical professionals, and Fitbit's partnership with Google could easily be overlooked.
Why don't doctors love Fitbits?
It seems like doctors should appreciate the data provided by Fitbit's devices. However, Fitbit's devices aren't certified medical devices, and use proprietary technologies to track steps, heart rates, and movements. On its website, Fitbit admits that "the accuracy of Fitbit devices is not intended to match medical devices or scientific measurement devices."
The 10,000 step guideline that Fitbit and other wearable makers follow is also based on an arbitrary number from a 1960s study in Japan. Therefore, data about a patient's daily steps and heart rate from Fitbit's devices isn't that useful for a real diagnosis.
That's why many doctors are reluctant to use Fitbit data in their treatments. In an MIT Technology Review report, Dr. Andrew Trister, an oncologist at Sage Bionetworks, stated that he had "no idea" what to do with patients' fitness tracker data. In the same report, Dr. Neil Sehgal, a senior research scientist at the UCSF Center for Digital Health Innovation, stated that clinicians "can't do a lot with the number of steps you've taken in a day."
Google is the wrong partner for Fitbit
Moreover, Google might not be a great partner for Fitbit.
Its parent company, Alphabet, has adopted a fragmented approach to the healthcare market. Its life sciences unit, Verily, collects genetic data via Google Genomics, develops experimental medical devices, and is exploring partnerships with health insurance providers. Meanwhile, Google offers Google Fit, which syncs data from linked apps and mobile devices, for mainstream users.
Google Cloud for Healthcare seems to target Apple's (AAPL 0.83%) HealthKit framework and Health app. Apple recently updated the Health app with a new Health Records section that tracks patients' digital health records.
Image source: Fitbit.
Apple stated that "patients of NYU Langone Health, Stanford Medicine, and nearly 40 other health systems representing hundreds of hospitals and clinics" were already using the new Health app to let patients view their medical records on their iPhones. Google, however, only stated that it was working with a "group" of customers, "including the team at the Stanford School of Medicine."
Medical professionals generally favor iPhones over Android devices, citing the former's lack of hardware and software fragmentation as key factors. In late 2016, healthcare social network Doximity reported that about 80% of healthcare users preferred iPhones. That's why the expansion of the iPhone's healthcare ecosystem with the Apple Watch represents a major threat to Fitbit.
Fitbit also stubbornly refuses to tether its devices to Apple's HealthKit and Health app, presumably to preserve the borders of its digital ecosystem. There are currently workarounds with third-party apps, but they compare poorly to the seamless integration of iPhones and Apple Watches with HealthKit.
Partnering with Google won't solve Fitbit's biggest problems
Fitbit hopes that expanding its digital ecosystem -- which includes its core app and a premium digital service, Fitbit Coach -- will lock in users and widen its moat against rivals like Apple.
Unfortunately, partnering with Google probably won't move the needle; many physicians don't care about wearables data, and those who do seemingly favor Apple's platform over Google's. Therefore, investors should probably take advantage of this news-driven rally to sell Fitbit instead of chasing this fallen stock.
