Drone Wars Are Heating up Between Google and Facebook

Drone WarsDrone wars are heating up between Google and Facebook, as the two internet giants vie with each other to take the high ground – literally – in the battle for the eyeballs of the planet. In the battle that has been shaping up for several years now, the number one and number two websites on the planet are each seeking to gain the upper hand over the other. That battle now has moved from ground zero to the skies overhead, as Google and Facebook vie for control over what might be called aerial resources as the rivals gp head to head in the war for market share in the air.

Until recently, Facebook was rumored to be closing a $60 million deal to purchase Titan Aerospace. Facebook’s announced intention was to use Titan’s high altitude solar-powered drones loft WiFi hot spots over third world countries, where five billion people have so far been denied the boons of internet access. On March 28, Facebook turned around and purchased the tiny British solar drone maker Ascenta for $20 million, perhaps because the British drone maker’s drones are reportedly capable of reaching altitudes of 60,000 feet.

The Facebook purchase was a reaction to Google’s Project Loon, in which helium balloons are being used to loft WiFi access points over remote areas where the internet is not accessible. Today, Google struck another blow in the drone wars by swooping in and snapping up Titan Aerospace to supplement Project Loon’s balloons by providing additional WiFi hot spots. Titan’s solar-powered drones will augment Project Loon’s flighty balloons with more controllable fixed wing aircraft. Google also plans to use the drones in conjunction with Google Maps as part of its ongoing efforts to map the planet.

Google’s purchase of the New Mexico drone maker indicates how quickly the drone wars are escalating, It also now explains Google’s acquisition of the Moffett Federal Airfield, in Mountain View, California, under a long-term lease with the National Aeronautics and Space Administration (NASA). Under that agreement, Moffett will continue to serve as both a military and civilian airfield under Google’s management, but Google also gets one of the largest airplane hangers in the world right next door to the company’s campus, perfect for storing the wide-winged high altitude aircraft.

Google has also been sponsoring the Solar Impulse project, an attempt to fly a one-passenger solar-powered aircraft around the world in 2015. The Solar Impulse project has so far built two drones over a four-year period at a cost of $124 million, or $62 million per aircraft. Google just paid less than that for Titan Aerospace, but the Solar Impulse aircraft have much bigger payloads than the Titan Aerospace planes, suggesting that Google might have a future use in mind for the giant solar-powered plane after its round the world flight is concluded in 2016.

What is at stake here for the two biggest players on the internet is a bigger piece of $40 billion that advertisers spent on the internet last year. Google, as the number one website, with more than six billion visits per day, is both a web browser and a search engine. As a web browser, it holds the attention of  visitors only long enough for those visitors to reach the websites they set out to find. As a search engine, however, Google holds onto visitors for up to several minutes at a time, as the visitors sort through the search results, but Google also has its own social network, Google Plus, which now claims 680 million members, around half of Facebook’s 1.23 billion membership.

On a daily basis, however, the two websites are running neck and neck. With each company attracting around 680 million daily visitors,  Facebook would be sitting pretty in a dead heat with its rival…except for Google-owned YouTube, which now boasts more than one billion users per month. Sandwiched between the two goal posts of Google’s financial empire, Facebook feels somewhat squeezed, leaving Mark Zuckerberg looking to the skies for inspiration.

The official story about their respective purchases is that both Google and Facebook want to bring the internet to the five billion people who do not have it yet. There is, however, already a built-in market right here in the United States that is chomping at the bit to find another, faster, better, less expensive alternative to increasingly expensive internet service providers.

Google and Facebook, in return, are watching Comcast’s efforts to extort fees from Netflix for carrying their bandwidth-saturating movie downloads, and chomping at the bit to open up alternative access routes for their customers. Google has already tried pulling fiber optic cables in selected American cities, but has so far found that pulling cable is hard work, and selling it is even harder, against marketing powerhouses like Comcast. Facebook has not tried that yet but, between them, their respective air forces could tumble cable from its pedestal as the on ramp for the information superhighway.

Google has one overwhelming fact in its favor. Sixty-seven percent of the world’s internet surfers use Google to look stuff up and find things. Facebook has one overwhelming fact in its favor; people spend ten times more of their surfing hours on Facebook than they spend on Google. They come and go through Google, but they stay on Facebook for hours at a time.

Those habits translate into advertising dollars. Facebook made a profit of $1.5 billion on advertising revenues of $7.87 billion in 2013, with revenues growing by 55 percent over the previous year. Google booked profits of $3.38 billion on earnings of $16.98 billion, with a 17 percent year over year increase in revenues, matched by a 17 percent increase in profits.

If Google and Facebook are successful at siphoning business away from Comcast and the other internet service providers, what might those other providers do in retaliation? Two answers come to mind.  They could throttle back Google and Facebook, as Comcast did to Netflix, or  buy into the drone wars with some drones of their own.

By Alan M. Milner
Follow me on Twitter @alanmilner

Sources:
USA Today
Tech Crunch
Google.com
WSJ Online
CNN Money

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