Google Inc Buys Drone Maker That Facebook Inc Was In Talks With

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Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) agreed Monday to buy Titan Aerospace, maker of solar powered high altitude drones, winning a battle with fellow Silicon Valley consumer data aggregator Facebook Inc (NASDAQ:FB) over the purchase.

No mention of obvious military usage in initial reports

A report in the Wall Street Journal noted that the Internet search firm added to its aerial photography capabilities and ability to spread internet connectivity among the disadvantaged.  Purchase terms of acquiring the Moriarty, NM aerospace company with 20 employees were not disclosed.

Not to be outdone by Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB), which had been talks to purchase Titan, latter announced that it was purchasing Ascenta, a UK-based drone maker that has been building $20 million drones for the military.

Military synergies

Despite early talk Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL)’s drone acquisition would be used for enhancing its Google Maps application, the primary revenue generated from drone manufacturing to date indisputably comes from military sales.  In this regard, Google appears to be building a growing portfolio of robotic military applications.  It had purchased a high profile military robotic company, Boston Dynamics in December.  Both of these organizations can sell to the US Military, where Google might have an existing relationship.  As a company that provides information to the National Security Agency (NSA) on its users, both Google and Facebook could be in a position to leverage their national security relationships.  Amazon.com, which recently purchased the Washington Post, has a multi-million contract with the CIA, having recently bested IBM in a technical shootout.

Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), as might be expected, didn’t mention the military applications of its acquisition.  In the report the company said Titan will work closely with Google’s Project Loon, building high-altitude balloons that send internet signals to areas of the world currently not online.  The cost benefit analysis of engaging in such a noble effort was not disclosed.  Google may also integrate Titan with Makani, another of Google’s early stage acquisitions that develops airborne wind turbines for energy production.

Titan expects to have commercial operations fully developed by 2015.  The company’s dragonfly-shaped drones, with a wingspan nearly as large as a Boeing 767, use batteries and solar panels and can operate at night.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com