There has been much speculation about where and how quickly Apple, Amazon, and Google will join the health care industry. At $1.7 trillion in 2016, Health Care is a growth opportunity where the three tech giants are seeking footholds.

Apple is shaping its health care involvement by harnessing its strength in electronics and software. It is launching apps and devices “to process medical data, offering products to researchers and clinical-care teams. The next big software update for its iPhone will include a feature, Health Records, to allow consumers to view, manage and share their medical records.” As well, Apple has introduced a wearable EKG to monitor heart arrhythmia and atrial fibrillation. It is staying away from trinkets and trivial applications.

Google is encouraging health, fitness apps and devices from developers who depend on its open source Android operating system. Although 75% of hospitals have adopted electronic health records, the records systems are often incompatible with each other, leading to mayhem for communications between providers. To address the incompatibility and lack of centralized storage, Google has created an application programming interface that can ingest the disparate record types from many medical sources. That gives independent developers an advantage, since they will not need to devise intake software for hundreds of data storage formats. They can concentrate on their application’s use of consumer data. Of course, a developer’s application need not be “medical,” it could be a commercial tool to identify candidates for insurance or financial products.

In line with the 21st Century Cures Act, Google and drug makers are collecting real world evidence (RWE) contained in consumers’ health records. Drug makers say that RWE data is far cheaper than the cost of pharmaceutical trials. Perhaps that is true but that suggests they can skip drug trials and head right for RWE. Trials are needed to demonstrate safety and efficacy. Only then can collection of RWE begin, so RWE is not a substitute for trials, unless regulators convince themselves trials are no longer needed.

The FDA and the European Medicines Agency are looking favorably at the collection of RWE. In contrast, many consumers will regard RWE collection as an invasion of privacy. In Britain, a hospital trust was reprimanded for giving health records of 1.6 million patients to Google which was using in them as training materials for its DeepMind (artificial intelligence) company.

Google must watch RWE developments closely. RWE will further dilute its stock of goodwill from consumers who remain unhappy with its collection of personally identifiable information – merely to please advertisers.

Pharma’s branded drug wing already carries heavy reputational damage from the sometimes outrageously high drug prices. Adding RWE resentment to that load is not in Pharma’s best interest. Activists think the consumers’ RWE data is likely to be monetized by big Tech and big Pharma in ways that harm or shortchange consumers.

Amazon’s strategic health care goals seem covert. Rumors say that it is headed into the pharmaceutical distribution business as Its actions suggest an interest in parts of the health care supply chain.

Amazon’s strength has been in the e-commerce supply chains of entertainment, books, electronics and to a lesser extent in food, but not in manufacturing. Amazon operates a superb cloud business and is expert at distribution and those strengths are relevant in other sectors. Recently, Amazon announced that it will offer a line of health supplements. Supplements require far less regulatory entanglement than does the manufacture of prescription drugs.

Amazon also joined JPMorgan and Berkshire Hathaway in a project that they hope will improve health care for their employees. The trio remain inscrutable about what they will actually do, even though the stated goal is to improve their employees’ health care experiences. Warren Buffet suggests they would at least reduce the growth of health care costs. No doubt the trio will learn a lot about the delivery of health services, and it is likely they will back any constructive insights with investments.

Amazon lacks the necessary licensing and certifications to handle the distribution of prescription drugs. It could acquire those authorizations but since it lacks retail pharmacies, Amazon would probably be limited to online prescription filling, much as some pharmacy benefit managers (PBMs) do as a sideline.

Amazon’s acquisition of Whole Foods does not help much with entry into the retail pharmacy stage of drug distribution. Whole Foods, with 430 grocery stores, does not sell prescription medications. Instead it offers an instore “Farmacy” selling organic foods and supplements. That does not provide a retail prescription outlet. Even if Amazon where to obtain the regulatory approvals and licenses and retro-fit each of its Whole Foods stores with a pharmacy, it would still have just a 1% share of US retail pharmacy outlets. Amazon is believed to be interested in expanding its food sales in France, but the nature of the French operation is yet unknown.

The six largest US grocery store chains operate 14,000 grocery stores with pharmacies. Walmart plus its Walmart Neighborhood and Sams branded stores operates 4,881 stores with pharmacies. Kroger including Safeway, Publix, Vons and others operates 4,300 pharmacies. Ahold Delhaize includes many other brands and operates 2,265 pharmacies, Albertsons operates 4,300 pharmacies. SuperValu and Costco have 1,582 and 500 pharmacies apiece. The major chains have concentrated into huge traditional grocers that would be very expensive for Amazon to buy.

The three largest drug store chains operate 24,000 pharmacies. Walgreens and CVS are the largest chains with 9,800 stores each. In 2014, Rite Aid had 4,587 stores, but that was broken up when, in 2017, Kroger purchased 1912 Rite Aid stores. In 2018, Albertsons bought the remaining Rite Aid stores boosting Albertsons pharmacies count to 4,300, moving itself into the 3rd position of grocery pharmacies.

Amazon was suspected to be interested in acquiring Express Scripts, but that PBM is being bought by Cigna. As part of its Rite Aid purchase, Albertsons acquired Rite Aid’s pharmacy benefit manager operation, a small, but potentially valuable piece of the drug distribution supply chain. Perhaps Amazon would be interested in that fragment, because it is likely to fit the ecommerce operations where Amazon excels.

Apple, Google and Amazon see the health care industry as extensions of what they already do well. Apple is building sophisticated apps and devices that bridge patient-provider relationships. Google encourages independent developers to build apps for its Android platform. Also, Google is collecting personal health care data, presumably to supplement the information it offers for sale to Pharma and other vendors. Amazon is piecing together parts of the health care supply chain that will fit its successful ecommerce model. For the most part, consumers will be beneficiaries.