Alphabet Inc (NASDAQ:GOOG), (NASDAQ:GOOGL) is just one of the major tech firms looking to get the internet to the remotest places on earth at a low cost. The firm’s Project Loon, which involves the use of thousands of balloons to deliver network connectivity, is still very much in the planning stages. The firm’s efforts have, however, run into legal trouble.
As Wired reported on Wednesday, Alphabet is being sued for technology it is using in its balloons. A firm called Space Data managed to convince the US Patents Office that it had the sole right to certain designs that impact balloon mobility. That ruling was made in June, and it looks like Facebook Inc (NASDAQ:FB) may be the big winner.
The Menlo Park firm is working on an alternative to Loon. Its solar-powered drone network is still in early testing. Encouragingly, however, the firm managed to get one into the air for more than an hour and a half in a recent test. Facebook says it has designed the planes to fly for three months interrupted once finished.
Alphabet moonshot fails patent test
Alphabet Inc (NASDAQ:GOOG), (NASDAQ:GOOGL) is going to have to go to trial in order to defend its patents from Space Data. The small firm has had technology related to balloon borne cellular networks since the start of the century. It started off developing an overhead pager service and transitioned into text messages and phone calls by 2006.
Most importantly, the firm tested its balloons on 4G data in 2012. That test came a year before Alphabet announced its Project Loon experiments.
While that time-line is interesting, the crux of the case surrounds a 2007 acquisition bid then-Google made for the firm. Showing interest, teams from the search giant were allowed to study Space Data’s technical documents as part of its due diligence. 10 days after Sergey Brin and a team from Google saw demos of Space Data’s tech, the Youtube owner broke off acquisition talks.
The story came to a head last month, reports Wired, when the UPO transferred a patent for changing a balloon’s direction by adjusting altitude from Alphabet Inc to Space Data. Now the case is likely to go to court, and the results are unpredictable.
What seems to be clear, however, is that Facebook Inc is winning the “free global internet” battle.
Facebook Inc reaches for the sky
While Alphabet wrestles down in the dirt with lawyers, Facebook is reaching for the sky. Back in June the firm managed its first successful test of its solar powered drone. “Aquila” has a wingspan wider than a Boeing 737, and it’s Facebook’s hope for the future of the internet.
If you’re reading this, however, from an under-served part of the world, don’t get your hopes up. The drone managed to stay airborne for just 96 minutes. The network won’t be ready until the drones are able to stay airborne almost indefinitely.
The drone is going to fly well above the cruising level of an ordinary airliner. That will make it out of reach of most weather. It will deliver internet through a laser communication system. The drone network will need a base station on the ground in order to deliver data access, and will operate on local ISPs.
In a move that presumably isn’t vulnerable to legal challenge, the firm plans to launch each drone using a helium balloon.
That’s a massive technical challenge for Mark Zuckerberg and his team, and Facebook’s more complex system leaves it far behind Alphabet Inc in terms of progress toward delivering global internet. The firm may be, however, well ahead of Alphabet on image.
Though the effect of the legal battle hasn’t yet stuck, it could be bad for Alphabet both in terms of its rollout and its image. A big corporation stealing intellectual property from a small firm rarely goes down well.
Delivering internet to the global poor
Facebook Inc and Alphabet Inc (NASDAQ:GOOG), (NASDAQ:GOOGL) aren’t the only firms working on a global internet network, but they seem to be the most advanced so far. Space X, the private space ferry firm headed by Elon Musk, is also in the race. That firm, sticking true to its roots, wants to deliver access through satellites.
The firm has asked for permits to put 4,000 such satellites into orbit in order to build its network.
The entire project works on two fronts for Facebook Inc (NASDAQ:FB) and Alphabet.
There are something like 5 billion people on the planet who don’t use the social networks regularly. As advertisers, this is the group that Alphabet and Facebook are aiming for. The more people they can get onto their services, the more data they can collect, and the more money they can make selling ads.
Project Loon and the Aquila drone may be great from a PR perspective, but they also make great, direct business sense. Both firms have kept the testing phase small in scope. That’s likely a positive to investors who could reasonably worry about cost overruns.
For now both Facebook Inc (NASDAQ:FB) and Alphabet Inc (NASDAQ:GOOG), (NASDAQ:GOOGL) are simply engaged in big, dramatic PR projects. With the Space Data lawsuit, the Alphabet effort could turn poisonous sooner rather than later. That leaves Facebook in a prime position to move beyond PR and into real action.
Is free internet an Alphabet stock mover?
Stocks are, according to economists at least, valued on all of their future earnings. That means that the free internet projects from both Facebook and Alphabet should have impact on the stock.
Right now, however, that really doesn’t seem to be happening. Wall Street has no real way to value these projects because they’re using very experimental technology. At the same time the revenue from serving the world’s poorest 5 billion people is probably not worth chasing too hard.
For the time being then, the Facebook drone and Alphabet balloon should be viewed more as marketing expenses by the firm. The more Facebook gets inspirational blog posts about “democratization” out there, the better it is for Facebook.
On the other side of the coin, the bigger the patent battle gets, the worse things could be for the search giant. For now, don’t expect the Space Data fight to have an impact on Alphabet stock. It’s worth keeping an eye on going forward, however.