Why Google is buying a seemingly crazy collection of companies

Take a look at a list of Google's 144 latest acquisitions and you'll notice most seem to have little in common. The seemingly random pattern of buyouts has a number of technology experts wondering just what the company is up to.

This week Google bought SlickLogin, an Israeli startup that uses high-frequency sound waves as the basis of a smart-ID login system. A few weeks ago Google bought Nest, a company that develops thermostats and smoke alarms that are connected to the internet.

In December its target was a slew of robotics companies, leading many to jovially question whether or not the company plans to develop an army of robots. Last May, Google purchased a firm called Makani Power that develops airborne wind turbines. In September it acquired a health care company called Calico, which is researching ways to defy aging. The eclectic list goes on.

Google has been acquiring companies since 2001, at some points buying one per week.

Google has always been much more than a search engine. It's an advertising company first and foremost - this is where most of its earnings come from. But Google's recent purchases demonstrate the ad-and-search empire may be evolving in a very different direction.

'There is a talent war going on'

In the past two years alone, the company has spent a staggering $17 billion US on acquisitions. That's more than its competitors - Apple, Microsoft, Amazon, Facebook, and Yahoo - have spent combined, according to a report by Bloomberg. 

George Geis, a UCLA professor who studies acquisitions, said he doesn't believe Google is just after brands, products or patents. He says Google is merging with companies at such a high rate because it's interested in acquiring the developers and creative talent behind the companies. They're what is called "aqui-hires," and they're all the rage in the Silicon Valley.

"They take an interest in the firm, but for the most part they seem to want to acquire the people," added Rob Enderle, a U.S. tech analyst.

When Google bought Nest, for example, it also snatched up Tony Fadell, who was essentially the designer of Apple's iPod. He led the team that created the first 18 generations of the iPod and three generations of the iPhone.

"There is a talent war going on for the future," said Geis. "You're not only getting someone who knows how to put devices together better, but you're also getting a creative, talented team that knows how to design an interface that can be attractive."

Google paid $3.2 billion to merge with Fadell's smart thermostat and smoke detector company. That's a big bet on internet-connected devices - keep in mind, it acquired Youtube for $1.6 billion in 2006.

Geis said part of an acquisition agreement at Google states the developers must stay with the company for a specified period of time, and they will get bonuses for staying to work on projects run by Google.

"They're going to bring you inside, they're going to merge you with their team, and then they're going to decide they want you to do something else," added Enderle.

Emerging markets

Google has a wide array of patents, too. Besides the things you'd expect, like search and communications technology, some don't seem to fit into any of Google's current business lines. One is for a walking stick that captures images, for example. Another is for a gadget that projects a keyboard into your hand.

Google has a patent on a device that implants a microphone in a user's throat, to essentially relay the sound of the voice to a smartphone (it can also act as a lie detector).

The company has even patented the 'heart-shaped hand gesture.' to allow Google Glass users to "like" something they see in real life using gesture recognition technology.

"What interests Google right now?" asks Enderle. "Pretty much anything that has to do with software or hardware technology."

The next big wave of technological advancements are expected to be in 3D printing, robotics, and artificial intelligence, said Enderle. Google has bought more than a handful of companies pertaining to the latter two.

Google bought Boston Dynamics, a military-industrial robotics company, last month, for example. One four-legged robot, called BigDog, is able to run at 6 km/h, climb 35-degree slopes, and carry a 340-pound load.

Google has expressed interest in developing assembly line robots for factories, but both Geis and Enderle predict it will develop robots for personal use at home as well.

The internet of things

Its interest in things like internet-connected devices and robots doesn't mean Google isn't also looking at new approaches for its current core business: Search and advertising. In fact, this is the underlying tie that connects many of its recent, seemingly diverse purchases.

"Most of what they're developing in any way shape or form finds out more about you," said Enderle.

The ad-tech company's purchase of Nest set something of a precedent, putting Google on the radar in the smart home technology sector, for example. But it also paved the way for the company to enter the connected home market, inserting Google and its data-gathering and advertising-related tactics into houses everywhere.

"Wherever people spend time, that's where Google really wants to have a substantial, distinctive presence," said Geis.

He said Google is interested in the "internet of things," and establishing a network of connected devices in the home and elsewhere that use Google technology. This will allow the company to gather more information about how we live and work when we're offline, to better advertise to us.

Most of what they're developing in any way, shape, or form finds out more about you- Rob Enderle

Nest's co-founder Matt Rogers wrote on the company's blog shortly after the acquisition: "Our privacy policy clearly limits the use of customer information to providing and improving Nest's products and services. We've always taken privacy seriously and this will not change."

But inevitably other intelligent Google appliances will enter the home, and they likely won't just be collecting data. Geis imagines there will be a constant stream of advertisements displayed on them.  

Google is not tiptoeing at all around the privacy concerns of consumers, said Enderle, who adds that it's "incredibly likely" the government will eventually step in and force Google to scale back its information-collecting tactics.  

However, at the moment the U.S. and Canadian governments are in a very weak position in terms of how to justify any restrictions.

"All the [NSA] leaks have made it nearly impossible for the government to step in and ask Google to stop what they're doing, because the government is doing it too," Enderle said.

He added that if no one gets in Google's way, it's on a path to become a massive technology and information conglomerate with autonomous devices at its core. Its ad business will gradually become smaller in terms of a percentage of its overall operations, he predicts, and much of the company's revenue will come from cloud services and increasingly intelligent products.

"They will be a superpower in and unto themselves," said Enderle, based on the company's current direction and momentum. "Google may well run the world in the future."