It's not like they don't already have health data. Google Fit exists and plenty of people use it - Any android wear devices, but also plenty of third-party devices feed into Google Fit. Any data they'll be able to get from Fitbit they can already get from Google Fit - acquiring Fitbit will just mean they'll have that same data for a whole bunch more people.

What they currently do with the fitness data they collect is probably a pretty good guidepost for what they'll continue to do with fitness data they collect.

Have you noticed how terribly siloed Google is? How you cannot use Drive to sync Photos, how long it took to get "One Google" subscription that still doesn't cover all that many of the products, how after moving it takes forever to have all the various products to agree on which country you live in? Dang, a few years back every product was separately asking for my age. That's not only because integrations are hard, but most importantly getting access to another team's data is a whole ton of lawyering through the privacy working group.

Now, that is for data that has no special legal protections. Whereas medical data is, for good reasons, subject to pretty heavy handed laws. Differing quite dramatically across all the diverse jurisdictions Google runs in. Sure, I have no clue what my employer's grand plan is here, but it will surprise me very strongly if medical data starts finding its way to established products. And note this is "medical data" according to the conservative common denominator across all the jurisdictions Google has to care about.

They also acquired Fossil.

It's just as likely they want to use fitbit brand to set the bar for android wearable portfolio, like they do with the Pixel for phones, than harvesting your daily steps for targeted advertising.