You can see why Dexcom seems to ramping up their marketing now (at least I'm seeing more of their ads where I never saw them before); will be a big blow to them if Apple incorporates it into the watch (unless they're using Dexcom tech inside)
I'm not convinced this is really going to matter. I'd love to be able to measure how much different foods affect my blood sugar. But because I don't have diabetes and am not at high risk for diabetes (based on my A1C), the Dexcom is absurdly expensive as just a toy to satisfy my curiosity. But if I could buy a $19 thigh strap for my iPhone to do this then I'd jump on that in a heart beat.
My understanding is that it’s a “safety” concern (read: liability). Because it would be providing “medical” advice the requirements around design are skewed to ensure that it doesn’t kill people rather than being permissive about the user experience [1]. Out of context, this seems sensible (therac anyone?) In practice this means that sensors like the Dexcom or Medtronic have “features” like alerts that cannot be silenced until the device is calibrated with blood. This makes sense from a safety perspective but is not particularly forgivable at 3am when the thing refuses to stop beeping until you feed it blood. I would guess that Apple will try, but they may find that their desired UX may not be compatible with the requirements imposed by the FDA process.
[1] This personal anecdote is old. I hope things have improved.