Google, Facebook, Amazon and the Future of Drones

Drones appear to be the next big thing and three major internet companies are looking at ways to make them a useful part of life.

Apr 16, 2014 at 8:33AM

Clearly executives at Google (NASDAQ:GOOG) have no fear of a Terminator-style future where a network of sky-bound computers turns sentient and takes over Earth's technology in order to eliminate humanity.

The company has become the latest to enter the flying drone market-it's purchased Titan Aerospace for an undisclosed sum, beating out Facebook (NASDAQ:FB) to buy the New Mexico-based start-up founded in 2012. Titan has conducted test flights but does not yet have a commercially available version of its high-altitude solar-powered drones. Possible uses for the Titan drones include data delivery, crop monitoring, and search-and-rescue aid.

Google appears interested in the company for delivering Internet access in remote areas, as PCMagazine reported the Titan team will work closely with Google's Project Loon, a venture that provides Web connections to under-served areas via high-flying balloons. Titan's drone vehicles can stay aloft for up to five years without having to land or refuel making them well-suited for long-term delivery of Internet access in remote areas.

"Titan Aerospace and Google share a profound optimism about the potential for technology to improve the world," Google said. "It's still early days, but atmospheric satellites could help bring Internet access to millions of people, and help solve other problems, including disaster relief and environmental damage like deforestation."

Google is not alone

Facebook negotiated with Titan Aerospace but opted instead to pay $20 million for Ascenta, a small UK-based company whose founders created early versions of Zephyr, which became the world's longest-flying solar-powered unmanned aircraft, Facebook CEO Mark Zuckerberg posted on a company blog. "They will join our team working on connectivity aircraft."

What Zuckerberg describes as "connectivity aircraft" are in fact drones working to help Facebook with its stated goal "to connect the whole world with" by beaming Internet from the sky. 

The company has made some progress on that goal. Zuckerberg reports that the company's efforts in the Philippines and Paraguay alone have doubled the number of people using mobile data with the operators Facebook has partnered with, helping 3 million new people access the Internet.

Amazon (NASDAQ:AMZN) has also entered into the drone space, though for reasons more directly related to growing its business. The company's Prime Air team has been testing drones that would theoretically allow same-day delivery to its customers. The company is developing the technology in-house. According to a letter to shareholders from CEO Jeff Bezos, Prime Air has already flight tested its fifth and sixth generation aerial vehicles and is in the design phase on generations seven and eight.

Is there money to be made in drones?

Amazon's drone program seems the most logical -- the the company has a clear path to making more money if it can offer near-immediate delivery of products. Take waiting out of the Amazon business equation and you remove a barrier to buying for a lot of customers.

As for Facebook and Google the path to profit seems less direct as bringing Internet access to far-flung areas creates new customers, but it seems like an expensive way to do that.

The money in drone technology so far has been in working with the U.S. government, which spent about $3 billion on its controversial drone program in 2012, according to Wall Street Journal.

That doesn't seem like a likely monetization path for Google or Facebook. Both companies maintain a sort of do-no-harm image that would clash directly with licensing technology to the government for assassinating foreign dictators, leading military actions from afar, or peeping into overseas windows for intelligence reasons.

Still the two companies might not be in the drone game purely to altruistically bring Internet service to those who would otherwise not have it. Instead they might be investing in the technology with the idea that it's going to be important without exactly knowing how.  

"Drones are going to be a way of life for us going forward," CNBC contributor Andrew Busch told Yahoo Finance. "Whoever has the range of products to offer different businesses is going to do very well."

Google and Facebook want to control the world

A network of drones (frighteningly similar to Terminator's Skynet) could give Google and Facebook access to countless customers they would never be able to reach otherwise. In addition to rural and low-populated areas not serviced by traditional Internet service providers, a drone network could become a viable option for mobile Internet access around the world. This would give whoever owns such a network enormous reach and access to an incalculable number of customers. It would also offer the ability to collect all sorts of data and deliver everything from map data to information, radio, news, and anything else you can dream of.

With a network of drones blanketing the planet Google and/or Facebook could be the companies that bring the Internet to cars and to everyone, everywhere cutting the ISPs out of the loop -- optimizing their services to deliver their own branded (and ad-heavy) experience. Imagine how eager people would be to sign up for a low (or no) cost Google or Facebook Internet service that's not tethered to a cable or WiFi network.

That might not be a quick result of Google buying Titan Aerospace or Facebook's purchase of Ascenta, but it's a possible endgame. And that could be a positive for humanity, as long as we can keep the flying robots from starting to think and deciding to kill us all.

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Daniel Kline has no position in any stocks mentioned. He is not really a fan of The Terminator movies. The Motley Fool recommends, Facebook, and Google (C shares). The Motley Fool owns shares of, Facebook, and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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