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Alphabet quietly made its experimental balloon project a full-fledged corporation - a first step to a new Google spinout
Posted by Damien Biddulph on Mon 16th Oct 2017

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Sergey BrinGoogle cofounder Sergey Brin with a Loon balloon.Yudhi Mahatma/Antara Foto/Reuters

Alphabet has quietly upgraded its internet balloon initiative from a research lab "project" to an official corporation, setting the stage for what could be the latest standalone business to spin out from Google's parent company.

Project Loon, which develops solar-powered balloons that beam internet access down to earth, has been incorporated as Loon Inc, according to regulatory filings. 

Business Insider first noticed Loon was listed as "Loon Inc." in a recent filing to the FCC seeking permission to float Loon balloons above Puerto Rico and provide internet access to areas affected by hurricane Maria. Previously, Loon was officially referred to as a project under Alphabet, or under X, the Alphabet subsidiary dedicated to creating ambitious "moonshot" technologies.

Loon's incorporation is a sign that Alphabet may be preparing to spin Loon out of the X division and let it operate as its own company. Alphabet went through a similar process last year with Waymo, the company formed out of X's self-driving car project. X also spun out Dandelion, a geothermal energy company, earlier this year, but Dandelion is not under the Alphabet umbrella.

A Loon spokesperson declined to comment.

Next candidate

One person close to X told Business Insider a few months ago that Loon was the next likely candidate for a spin out of X. In February, Alphabet X's business tapped Alastair Westgarth, a telecom industry veteran, to be the new CEO of Project Loon

Getting spun out from the mothership often indicates that Alphabet believes an experimental technology or product has matured enough to be ready for commercialization. That gives the spinout company the freedom to pursue its own business objectives, while at the same time subjecting it to the financial pressures of an independent business.

Google has previously said that it believes Loon's "floating cell towers in the sky" could one day become a business that generates billions of dollars in revenue. So far however, Loon has only seen limited deployments in areas like Sri Lanka, Peru, and more recently Puerto Rico.

As a standalone company, Loon would join a growing roster of Alphabet subsidiaries, known as "Other Bets," such as high-speed internet service Access, smart appliance maker Nest and Waymo, the self-driving car company. In the second quarter of the year, Alphabet's Other Bets posted an operating loss of $772 million, on revenue of $248 million.

Spencer Hosie, a lawyer representing Loon competitor SpaceData in a lawsuit, told Business Insider that he noticed the change in Loon's status in the recent FCC filing. Hosie said he plans to add Loon Inc. as a defendant in SpaceData's case against Alphabet. It's unclear when exactly Alphabet incorporated Loon, but Hosie said he suspected that it could have been as recently as last week.

Julie Bort contributed to this report. 

Source: uk.businessinsider.com

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