Big Tech x Insurance (part #1)

Decoding Google's insurance investment thesis, Apple v/s Google in wearable-linked insurance and Amazon's infrastructure play!

Hello folks! After hearing about Apple’s “Operating System for Health” strategy (revealed at WWDC ‘20), I found lots of online articles about Big Tech involvement on the “provider” side of the Healthcare market. As per usual, nothing material on the “payer” (i.e. insurance) side.

So, let’s dive in; starting with our favorite search engine -

Google

Unlike the other Big Tech companies, Google has a rigorous investment approach in the USA:

1. Gradient Ventures i.e. AI fund

2. Google Ventures i.e. life sciences & consumer tech fund

3. Alphabet - holding company for Private Equity rounds

Below are noteworthy (consumer-facing) investments in insurance by Google:

I was very excited to note that Alphabet had participated in Oscar Health’s recent $225M round; as I tweeted below - it provides some legs for my hypothesis regarding Google’s USA Health Insurance investment strategy (TAM ~ $1 trillion p.a.)

Rahul Mathur @Rahul_J_Mathur

Bit more info: Alphabet participated in the recent $225M round in Oscar Health (unsure if pro-rata or super) This further suggests that my guess on Google's Insurance Investment Thesis has some legs (published Thurs) #insurtech (Source: seekingalpha.com/article/435586…)

Rahul Mathur @Rahul_J_Mathur

💰 $225M raise from @OscarHealth today! 🧑‍🤝‍🧑420K members 💸$1.3bn premiums ('19) Total raise to date ~ $1.5bn '20 revenue target ~ $2.2bn Last disclosed valuation ~ $3.2bn 🔥Mem growth (100K in '17; 260K in '18) #insurtech More here 👇 https://t.co/hmlwY92ClK https://t.co/HTOjQkgYRM

Via its investments, Google has a presence across the US Health Insurance market (I won’t go into too much detail here because the market is complicated! But, happy to answer specific questions!)

But, Google’s “Trojan horse” in health insurance is its renewed focus on wearables (watch out Apple!) - it acquired Fitbit in November ‘19 for $2.1bn and bought out Fossil’s smartwatch technology (proud power user here!)

Talking about wearables - I’ll jump to Apple before coming back to the “wearable war between Google & Apple”

Apple

I’d begin by saying that Apple is, hands down, winning the partnership game in wearable-linked health insurance plans (via its Apple Watch series)

In addition to the Vitality partnerships (UK and USA), they’ve gone so far as to build an engagement app (Attain) together with incumbent insurer Aetna in the USA.

I suspect Apple’s dominance in this segment is driven by the fact that UK and USA are Apple-heavy economies with high nominal health premiums (this likely wouldn’t pan out in Apple’s favour in SE Asia; local wearable manufacturers like GOQii sell at x10 lower price points which can be supported by health insurance premiums in the region)

But, here’s where Google and Apple clash

1. Both want to provide an “Operating System for Health” i.e. provide a data warehouse for physical activity, Electronic Medical Records and other “biomarkers” (e.g. respiratory activity, sleep patterns, blood glucose etc)

   • Manifested via Google Fit v/s Health by Apple

   • Supported by Fitbit/Fossil watch v/s Apple Watch

2. Both will vie to become the “default wearable partner in insurance”

To be honest, I don’t know whether this is a winner-take-all scenario, but Google might have the edge here on “scale” (Android penetration in Asia) and “strategic investments” (as above)

Whilst Apple and Google are going head-to-head, Amazon is having its own party:

Amazon

In insurance, Amazon has two famous ventures:

1. Haven Health - a JV with Berkshire Hathway and JP Morgan for employee benefits (health) management.

2. Acko - Amazon invested $12M in Acko’s Series B; Acko is also helping AmazonPay begin insurance distribution in India!

I find some aspects of Amazon’s healthcare strategy fascinating:

In my mind, Amazon probably isn’t looking for “insurance partnerships” and via its infrastructure play, might just create an “AWS for Healthcare” out in the West.

Closing thoughts

Google and Apple are fairly interested in insurance; Amazon is running its infrastructure play; I’ve summarized the content above into a single matrix for you to delve upon:

As always, if you liked this, please do leave a Like! And, I’d love to hear from you - any constructive criticism, feedback or comments are welcome! I’ll write about Chinese Bg Techs x Insurance in the near future!