Why is Google selling off its satellite fleet?

Google opts to purchase satellite imagery rather than manage its own in-house fleet. 

Jon Shenk/AP/File
A 2013 Google balloon sails through the air with the Southern Alps mountains in the background, in Tekapo, New Zealand. Google is testing the balloons which sail in the stratosphere and beam the Internet to Earth.

Google’s parent company, Alphabet, may have sky-high ambitions, but for now, it looks like they’ll be capped at around 60,000 feet.

With the sale of recently acquired satellite imaging company Terra Bella, Alphabet trades direct control over its own fleet of satellites – and all the hassles that can bring – for rights to purchase pictures for Google Earth from a third party. This reorganization is the latest in a series of moves focusing on balancing the company’s eclectic interests with investors’ desire for profits.

In 2014, Google, as the company was still called at the time, purchased Terra Bella and its constellation of seven high-resolution satellites for for $500 million. Now, competitor Planet Labs Inc. will purchase Terra Bella for an undisclosed sum, it announced on Friday in a press release.

The Terra Bella satellites can provide Google Earth with crisp images resolving features smaller than three feet across, which Planet Labs says is more than 3.5 times the sharpness of their current fleet composed of 60 mid-resolution satellites.

As part of the deal, Planet Labs agreed to sell Alphabet imagery for the next five years, and Alphabet will receive a stake in the company. Planet Labs will also take on a number of Terra Bella employees.

Google underwent a dramatic corporate restructuring in 2015, when it created Alphabet as a parent company overseeing Google’s huge range of products and sometimes outlandish projects.

In addition to the standard search and advertising business, Alphabet also has its fingers in a variety of fields including self-driving cars, life-extension research, urban planning, and a number of other ambitious projects sometimes referred to internally as “other bets.”

But search and advertising are really the company’s bread and butter. In 2016, ads made up almost 90 percent of Alphabet's revenue, prompting one ex-executive to say, “No one wants to face the reality that this is an advertising company with a bunch of hobbies,” Bloomberg reported last year.

Some of those hobbies don’t come cheap. All together, the non-Google branches of Alphabet lost about $3.6 billion in 2015, double that of the previous year, Bloomberg says.

To reign in costs and mastermind the reorganization, Google/Alphabet brought in Ruth Porat, whose resume includes a stint as an adviser to the Treasury Department during the 2008 financial crisis. Her fiscal streamlining prowess has been popular with shareholders, but controversial among Alphabet’s many “moonshot” departments, where she’s known by the nickname Ruthless Ruth

“She’s a hatchet man,” a former senior Alphabet executive told Bloomberg. “If Larry isn’t excited about something,” the executive continued, referring to CEO Page, “Ruth kills it.”

Other recent casualties include the canceling of an internet providing, solar powered drone network, and an attempt to sell off all-terrain walking robotic creator Boston Dynamics.

But other moonshots have made the cut. Development continues on project Loon, for example, which aims to provide free or low-cost internet to as many as 4 billion people via a worldwide fleet of 100,000 giant weather balloons, as pictured above. Think Pixar’s animated movie Up, but one colossal balloon carrying a super powered wifi router instead of a house.

Meanwhile, Planet Labs has big dreams too. On valentine's day, it plans to launch a record-breaking 88 satellites to expand its current range to cover the entire planet.

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