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While the company said that its decision to shut Loon is related to its lack of commercial success, another reason could be in the increased interest of Amazon and SpaceX in the connectivity business.
Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), the parent firm of Google, has announced that it would be shutting down Loon, a division of the firm that is focused on providing access to internet services for people in remote areas of the world. This was made known through a blogpost by the tech company.
According to the blog post, the firm was making this decision because the division was not commercially viable. The tech company said it was unable to find a successful business model or partners for the project.
Astro Teller, who heads Alphabet’s X moonshot division, highlighted the fact that Loon had proven to be more “riskier than hoped” and he also added that “in the coming months, we’ll begin winding down operations.”
Loon, which started as a moonshot in 2013 before becoming a fully fledged independent company in 2018, first gained publicity when it was able to restore internet services to areas in Puerto Rico that were ravaged by a natural disaster. The firm also played a key role in the provision of internet services to Peru after the country suffered a debilitating earthquake.
The CEO of the firm, Alastair Westgarth, expressed pride in the groundbreaking effort of the Loon team for their important technical contributions in the approach to connectivity. He also rehashed Teller’s view when he said that the business “haven’t found a way to get the costs low enough to build a long-term, sustainable business.”
This move comes at a very surprising time considering the fact that the company was approved by the Kenyan government to launch its first commercial balloons. Upon approval, the firm was able to successfully achieve this which could have been read to mean that all was well with the company and that it was moving in the right direction.
In another publication of the firm, it was stated that the firm is going to continue its services in Kenya until March and it was willing to support nonprofits organizations and businesses whose focus is on connectivity, internet, entrepreneurship and education in Kenya with a $10 million pledge.
Other Reasons Why Alphabet Could Be Shutting Down Loon
While the company has said that its decision to shut Loon was due to its lack of commercial success, another reason why the company may be shutting down the firm could be due to the increased interest of Amazon.com Inc (NASDAQ: AMZN) and SpaceX in the connectivity business.
One other reason that could have influenced their decision could be due to the recent efforts by most of these developing countries to solve their internet connection problems on their own. These countries are mostly where the services of Loon and other internet connectivity providers would be needed most.
Loon is not the only project that Alphabet has recently shut down. The tech company had also ended Google Station, a project that was designed to provide internet connectivity in public places. It had successfully provided these services at over 400 railway stations in India and was looking to do the same in other countries before it was shut down.
Other Moonshot projects like Makani and Foghorn have also been closed. Project Makani focused on creating renewable electricity while Foghorn was working on how to create clean fuel from seawater.