Google Closes Loon, Its Plan to Use Balloons for Web Access -- Update
By Matt Grossman and Sarah E. Needleman
Google's parent company is winding down a project that used
highflying balloons to provide internet access in hard-to-reach
regions of the world, as it retreats from some of the moonshot
projects championed by its founders.
The project, known as Loon, started in 2011 and had its first
public launch in New Zealand in 2013. It sought to connect billions
of people in communities where traditional ground-based
infrastructure was too expensive or too difficult to install. But
Loon, which was overseen by Alphabet Inc., was unable to reduce
costs enough to make its business model sustainable, the project's
leader, Alastair Westgarth, wrote in a blog post Thursday.
"Developing radical new technology is inherently risky, but that
doesn't make breaking this news any easier," Mr. Westgarth
Loon's technology sent gas-filled polyethylene balloons the size
of tennis courts into the stratosphere, typically to altitudes of
around 60,000 to 75,000 feet. There, onboard communications
equipment beamed internet signals back down to earth. The system
was able deliver mobile coverage to an area 200 times greater than
a typical ground-based cell tower, Mr. Westgarth wrote.
Loon was part of the conglomerate's "Other Bets" segment, a
collection of independent projects that include self-driving car
initiative Waymo, life-sciences company Verily, and venture
investment arm GV. The segment recorded an operating loss of more
than $3.3 billion through the first nine months of 2020, steeper
than the nearly $2.8 billion loss recorded in the comparable period
a year earlier.
Though those nascent ventures have yet to result in big hits,
Alphabet Chief Executive Sundar Pichai has said he isn't giving up
on Other Bets but has suggested he wants to impose more discipline
on the projects. Waymo raised more than $3 billion last year from
outside investors including private-equity firm Silver Lake, Canada
Pension Plan Investment Board and sovereign-wealth fund Mubadala
Alphabet has walked away from other ventures. Its Sidewalk Labs
pulled out of a project last year to develop a "smart city" in a
Toronto neighborhood, citing economic uncertainty and pressure on
the local real-estate market during the coronavirus pandemic.
Alphabet also wasn't alone in pursuing projects aimed at
delivering internet to remote areas. Satellite venture OneWeb went
bankrupt before being bailed out last year by the British
government and others. Companies such as Amazon.com Inc. and Elon
Musk's SpaceX also have continuing efforts to provide internet
connectivity in hard-to-reach places.
Loon's closure isn't surprising because Alphabet hasn't
mentioned the unit on any earnings or conference calls in more than
a year, said Truist Securities analyst Youssef H. Squali. The
decision shows there is indeed "some financial discipline at work,"
With other side ventures such as Google Fiber, Alphabet has
scaled back its ambitions rather than pull the plug completely,
which suggests Loon didn't achieve enough goals to justify its
upkeep, according to AB Bernstein analyst Mark Shmulik. "They're
serious about their time horizons" for success, he said, adding
that he expects the tech giant to sharpen its focus on ventures
that can attract external investors or generate revenue
While Loon is now officially closed, some employees will remain
over the next few months to help wind down operations, an Alphabet
spokeswoman said. Many of the startup's employees will move into
roles at Alphabet's various units, she said, declining to disclose
how many people worked for Loon.
Partnerships brought Loon internet coverage to developing
countries and areas affected by natural disasters. In 2015,
Alphabet said that Loon would help expand internet access in
Indonesia, where two-thirds of the country's 250 million people
weren't online at the time. Two years later, the project deployed
balloons to the skies above Puerto Rico after Hurricane Maria
damaged the island's communications infrastructure.
Because floating balloons move across the Earth's surface with
the surrounding air, Loon's vessels drifted at the mercy of
high-altitude winds. The balloons could automatically climb and
descend to find winds that would help keep them in the right place,
Loon said. The venture held at least 1,750 balloon launches since
2013, and its vessels logged more than one million flight
Write to Matt Grossman at firstname.lastname@example.org and Sarah E.
Needleman at email@example.com
(END) Dow Jones Newswires
January 22, 2021 12:27 ET (17:27 GMT)
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