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Google’s robot acquisitions likely cost less than $100 million

February 13, 2014

andy-rubin

Photo: Andy Rubin, Head of Google’s Robot Revolution, former head of Android.

There is much speculation about Google’s intentions with its acquisition of eight robot companies in the fall of last year. What has been missing in this speculation is just how much it has spent on the eight companies.

The acquisitions of the robot companies appear to have been completed in the last quarter of 2013; they were announced in December.

At the end of the third quarter of 2013 Google stated in their financial reporting that they had completed twenty-one acquisitions with a total value of $1.338 billion. They confirmed that $969 million of this was spent on the purchase of mapping company Waze.

The remaining $369 million was spent on purchasing an additional twenty companies.

None of these were material so the company does not have to account for them individually in its regulatory filings.

Some of these acquisitions can be found online. The largest of them was Channel Intelligence for which Google reportedly paid $125 million. Then there are lots of smaller acquisitions ranging from file sharing app, Bump for $35 million, motion detector device Flutter, which cost $40 million. The acquisition of Wavii for $35 million enhances Google’s natural language technology. They boosted their cloud computing capabilities when they brought in Talaria Technologies for around $20 million, their green energy capacity with the addition of Makani Power to the Google X team for around $30 million. They also brought in some great recruits with the purchase of DNNResearch headed up by AI expert Geoff Hinton for around $5 million, and employees from the venture fund Hatter again for around $5 million. Google also bought 217 patents from IBM during the first 9 months although it’s not clear where these have been accounted for and could be expensed in R&D.

This is a nominal selection of the 20 non-material acquisitions in the first three quarters of 2013, accounting for $318 million of the $369 million expenditure, but it helps establish a baseline for the cost of the robot companies they bought.

Yesterday Google posted their annual report on form 10K on the Securities and Exchange Commission (SEC) website. In the annual report they confirm that during the twelve months ended 31st December 2013 they spent a total of $489 million on acquisitions that were not material and therefore did not require specific details. They also accounted for the Waze acquisition at $969 million – “The acquisition is expected to enhance our customers’ user experience by offering real time traffic information to meet users’ daily navigation needs.”

Now we know that they spent $369 million on non-material companies in the first three quarters and $489 million during the whole twelve months, we can safely calculate that $120 million was spent in the fourth quarter on non-material acquisitions.

The announcement of French company Flexycore for a rumored $23 million took place in the fourth quarter (end of October) and its not clear when they closed the deal for Flutter on whom they spent $40 million, as the media picked this up on 2nd October, but I’ll ‘assume’ they closed it in the 3rd quarter.

Taking the deal for Flexycore off the table indicates that Google spent an additional $97 million during the last quarter of 2013 on acquisitions, the time during which they bought the 8 robot companies.

It’s likely that somewhere between $50 million and $60 million of this $97 million went on the purchase of those eight robot companies.

It’s fascinating that these acquisitions have created such media speculation given the nominal size of the purchase costs.

Of course this is very good news for the robotic industry as it possibly increases the value of the sector in the eyes of investors, raises awareness about the advances being made in robotics and brings an important subject about the future direction of technology and jobs into the public domain.

As I have said before, Google’s acquisition of robots and Artificial Intelligence technologies is anything but scary.

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Colin Lewis is a behavioral economist... read more


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