I think they gave us enough information to understand their legal strategy. They will argue that the watch has sufficient processing power to transcribe the text in real time, and a plain text transcript is not a recording.

It likely stretches the definitions compared to what most people who do not want to be recorded think the laws should prevent, but on the other hand at least it couldn’t be used as legal evidence. It sounds intended as a memory aid, where passing a transcript for gossip purposes will hopefully be met with automatic skepticism as something that isn’t authenticated in any way and could be made up entirely.

They probably spent enormous amounts of time weighing how much legal jeopardy it would create for their customers.