OAKLAND, Calif. – Google’s parent company Alphabet is closing Loon, a high profile subsidiary that emerged from its research labs that used hot air balloons to provide cellular connectivity from the stratosphere.
Almost a decade after the project began, Alphabet announced Thursday that Loon pulled the plug because it saw no way to cut the cost of creating a sustainable business. Alongside the Waymo self-driving car unit, Loon was one of the most hyped “Moonshot” technology projects to emerge from Alphabet, X’s research lab.
“The road to economic viability has proven to be much longer and riskier than hoped. So we made the difficult decision to close Loon, ”wrote Astro Teller, head of X, in a blog post. Alphabet said it is expected to shut down in “the coming months” in hopes of finding more Loon jobs at Alphabet.
The idea behind Loon was to bring cellular connections to distant parts of the world, where building a traditional cellular network would be too difficult and too expensive. Alphabet touted the technology as a potentially promising way to bring Internet connectivity to not just the “next billion” consumers, but the “last billions” as well.
The giant polyethylene hot air balloons are the size of tennis courts. They were powered by solar panels and controlled by flight control software that used artificial intelligence to drift efficiently in the stratosphere. In the air, they act as “floating cell towers” that transmit Internet signals to ground stations and personal devices.
Google started working on Loon in 2011 and started the project with a public test in 2013. Loon became a standalone subsidiary in 2018, a few years after Google became a holding company called Alphabet. In April 2019, the company accepted a $ 125 million investment from a SoftBank entity called HAPSMobile to advance the use of “height vehicles” to provide Internet connectivity.
Economy & Economy
Jan. 21, 2021, 4:40 p.m. ET
Last year, the first commercial deployment of the technology was announced with Telkom Kenya to provide 4G LTE network connectivity to nearly 31,000 square miles of area in central and western Kenya, including the capital, Nairobi. Previously, the balloons had only been used in emergency situations, for example after Hurricane Maria switched off the cellular network in Puerto Rico.
However, according to a November report in The Information, Loon was slowly running out of money and turned to Alphabet to keep his business liquid while he sought another investor for the project.
The decision to shut down Loon is yet another signal of Alphabet’s recent austerity measures on its ambitious and costly technology projects. Under Ruth Porat, Alphabet’s Chief Financial Officer since 2015, the company has closely monitored the finances of its so-called other bets. These are young companies that aim to diversify from their core business with advertising.
Alphabet has aggressively pushed its “other bets” such as Waymo and Verily, a life sciences division, to accept outside investors and go into business for themselves. Projects that did not secure external investment or did not show sufficient financial prospects were discarded, such as Makani, a project to manufacture wind power kites that Alphabet discontinued last year.
These austerity measures were a remarkable change from a time when entities like X, a popular vanity project by Google co-founders Larry Page and Sergey Brin, who had the autonomy to invest freely to pursue ambitious technology projects, even if the financial outlook remained unclear .