How is Big Tech's Healthcare Revolution Going?
Big Tech has a history of diversifying into different industries to reduce their dependence on their core business. Recently, their ambitions have converged on one industry in particular: healthcare. But while Apple, Alphabet, Microsoft, and Amazon have agreed on a common target, each company is attacking the industry from different angles and facing unique challenges.
While it may be surprising at first, healthcare makes sense as the next industry-to-disrupt. First and foremost, it is massive: healthcare spending represents 16.8%of gross domestic product (GDP) in the US, or $4.3 trillion of spending in 2021 (1). Secondly, the healthcare industry runs on prehistoric technology. For instance, in 2019, 7 in 10 hospitals still used fax machines to exchange patient health records (2). Big Tech’s dominance in cloud technology, data analytics, and artificial intelligence (AI) are perfectly suited to increase operational efficiency within the healthcare system and extract valuable insights from a wealth of underused health data.
Apple first launched into the health space in 2015, with the introduction of the Apple Watch. Now worn by more than 100 million people, these devices can track health metrics such as heart rate, irregular cardiac rhythms, and blood oxygen levels, and sync this data to Apple’s digital health records. Additionally, Apple has introduced SMART Health Cards, allowing users to store COVID-19 vaccination and test result records in the iPhone’s health app. Despite this abundance of data, Apple has chosen not to take the final step to becoming a healthcare provider, which would be to give specific medical advice to Apple Watch users based on their data. The most likely reason for this is that it could lead to legal trouble if an Apple Watch gave its consumers inaccurate results (3). But until Apple starts giving people concrete medical guidance, its impact on people’s health and the healthcare industry at large could be limited.
Alphabet also ventured into the wearables market with their acquisition of Fitbit for$2 billion in November 2019. Since then, Alphabet’s major moves in healthcare have been made by Verily, their life science subsidiary (and the second-biggest subsidiary behind Google). Verily has forged collaborations with biopharmaceutical companies such as Sosei Heptares and Otsuka Pharmaceutical to develop treatments in immune-mediated diseases and major depressive disorders. Meanwhile, their subsidiary Calico Life Sciences aims to develop therapeutics that slow aging. Verily has also established a major partnership with L'Oréal to launch a large-scale study on the drivers of skin and hair health.
Microsoft, on the other hand, has zeroed in on its healthcare cloud platform. The company purchased Nuance Communications, a major player in healthcare cloud and AI software, for nearly $20 billion dollars in 2021.Interestingly, Microsoft has been able to leverage its 49% stake in OpenAI to integrate GPT-4 technology into Nuance’s voice-enabled medical scribe tool. The combination of Microsoft’s data analytics capabilities, its existing cloud platform Azure, Nuance Communications, and its relationship with OpenAI set the company up to be a major force in the healthcare cloud and AI software market.
While these are all considerable efforts, no company is making bigger plays in healthcare than Amazon. The company’s boldest move in this direction was its acquisition of One Medical, a membership-based primary care service, for $3.9 billion back in February. One Medical synergizes with Amazon’s two digital pharmacies: Amazon Pharmacy and Pill Pack. By running their own primary care clinics and digital pharmacies, Amazon can control the care delivery process and deliver unparalleled price transparency. Furthermore, Amazon’s ownership of Whole Foods also enables them to fold nutrition and supplements into their care delivery. What’s more? The entire operation can run on Amazon Web Services, the biggest cloud provider in the world.
These attempts to break into healthcare have been accompanied by many high-profile failures, illustrating just how fractured and stubborn this market can be. In fact, Amazon’s acquisition of One Medical was the company’s third attempt to break into the primary care space, after the failure of Amazon Care and Haven Health. Amazon also quietly abandoned its wearables company Halo earlier this year after not being able to compete with Apple and Google. Microsoft’s electronic medical record system HealthVault met a similar demise in 2019.Meanwhile Google has launched, and shut down, two different projects called “Google Health” (in 2011 and in 2021) and Oracle, a tech giant in its own right, has halted its$16 billion digital overhaul of the VA medical record system, with the project possibly being scrapped altogether (4).
In conclusion, the movement of Big Tech towards healthcare signifies a monumental shift in the technology landscape. However, their shared mission to revolutionize an industry burdened by outdated systems is fraught with challenges, as highlighted by their numerous failed attempts. Will any of these new and ambitious strategies work, or will the old guard live on? Only time will tell.