Google and Amazon: Competitors With a Common (Drone) Goal

Google's surprise announcement that it was testing drones may actually benefit its competitor as the two companies work toward getting the technology legalized.

Sep 3, 2014 at 6:32PM (NASDAQ:AMZN) has been testing unmanned drones for use in same-day delivery, but faces significant legal hurdles if the company actually wants to use them in the United States. Now, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) has begun testing its own drones for exactly the same reason and while this signals increased competition between the two, it also might mean drones will clear those legal hurdles faster and end up with a place in the delivery business.

If only Amazon were pursuing this, then it would seem a bit like a plan by a mad scientist. But with Google joining the fray -- along with its significant experience overcoming legal objections to its driverless car concept -- and becoming another major voice in favor of legalization of unmanned delivery drones, the idea instantly becomes more valid.

One major company pursuing this idea could be a flight of fancy, but two working toward the same thing -- albeit so they can compete with each other -- is a powerful force that could influence legislative change.

What is Google doing?
In a project that had been kept secret until last week, Google has challenged a team at its Google[x] lab to make a drone that could actually deliver a product. The company succeeded in doing that and released a video through its YouTube platform that showed a farmer in rural Australia ordering dog food that was then delivered by drone.

The company explained its efforts on the page below the video.

Project Wing is a Google[x] project that is developing a delivery system that uses self-flying vehicles. As part of our research, we built a vehicle and traveled to Queensland, Australia for some test flights. There, we successfully delivered a first aid kit, candy bars, dog treats, and water to a couple of Australian farmers. We're only just beginning to develop the technology to make a safe delivery system possible, but we think that there's tremendous potential to transport goods more quickly, safely and efficiently.

Google has not commented on any commercial applications for its drones. It seems likely the company -- if it can build drones which work and clear the many legal hurdles required to use the technology -- could use them with its Google Shopping Express service. This new offering, a clear competitor to Amazon's growing same-day delivery service, sells items from a variety of retail partners delivered that day.

Though making a delivery in rural Australia and urban America are very different bets, Google's video shows that the technology has potential.

The company has also retained law firm Akin Gump Strauss Hauer & Feld LLP to lobby government officials on the use of drones; Amazon has hired the same law firm, according to The Wall Street Journal.

When Google wants something, money is no object and the company has spent almost $9 million lobbying this year through late July, the same Wall Street Journal story reported.

What is Amazon doing?
The online retailer has been very public with its efforts to develop Amazon Prime Air -- a drone-based delivery service. CEO Jeff Bezos commented on the efforts in an April 2014 letter to shareholders. "The Prime Air team is already flight testing our 5th and 6th generation aerial vehicles, and we are in the design phase on generations 7 and 8," Bezos wrote.

Amazon has also released video of a test flight and on the Amazon Prime Air page on its website, the company said it's ready to put drones into service in the United States as soon as the FAA allows its:

From a technology point of view, we'll be ready to put Prime Air into service as soon as the necessary regulations are in place. The Federal Aviation Administration (FAA) is actively working on rules for unmanned aerial vehicles.

Amazon has also made public a very detailed letter the company sent the regulatory board in an effort to get approval.

Could they succeed. and will one side win?
When Amazon first started talking about drones, it seemed like a publicity stunt. With Google entering the fray while the two companies are finding themselves as competitors in the same-day-delivery market, the technology seems closer to jumping from science fiction to reality.

The FAA has been slow to rule on the commercial use of drones, though a spokesman for the agency has said the FAA expects to publish proposed rules for small unmanned aircraft (less than 55 pounds) at some point this year, The New York Times reported.

it seems that eventually there will be rules for drones and though the parameters are likely to be tight, they will be allowed for commercial use in some fashion. Google joining Amazon in the fight should make that happen sooner.

Once drones are legal, the question becomes, "Are they viable?" The idea of a tiny plane delivering an order to a New York City apartment window is neat, but it also seems a lot more expensive than current delivery methods.

Drones could be a game changer, but while the addition of Google to the field makes their eventual legality inevitable, there remains a huge space to breach between "legal" and "practical." The concept is fun and may someday matter, but, it's likely to be years before either Google or Amazon can claim a competitive advantage over the other due to the use of drones.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends, Google (A shares), and Google (C shares). The Motley Fool owns shares of, Google (A shares), 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

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
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Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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