Google is selling its satellite arm Terra Bella to a San Francisco-based startup Planet Labs, the two firms announced on Friday. Neither party disclosed financial details about the deal, but they did reveal that Google will still be licensing the satellite imagery obtained by Terra Bella's satellites. The transaction is subject to all standard regulatory approvals in the United States but will presumably be completed by the end of the year. The announcement of this transaction comes only a few weeks after reports about Alphabet selling Terra Bella started surfacing.
Terra Bella, previously known as Skybox Imaging, is a satellite imaging subsidiary of Google which the Mountain View-based tech giant acquired for approximately $500 billion in mid-2014. The company was renamed to Terra Bella in early 2016, and that move was said to refer to the firm's new focus on imaging technology. Planet Labs has a similar business focus to Terra Bella as the San Francisco-based startup mostly deals in cost-effective satellites designed for highly specific purposes. Given its portfolio, the acquisition of Terra Bella makes sense for Planet Labs seeing how it allows the company to quickly expand its operations and eliminate a major competitor. The aforementioned report from January suggested that not all Terra Bella employees will move to Planet Labs as a part of the acquisition, and the company's co-founder and CEO Will Marshall confirmed as much on Friday. Marshall wrote that everyone at Planet Labs is happy to welcome "a number of Terra Bella employees" to the company and while he didn't mention what will happen with the rest of the workforce, previous reports indicated that most of the remaining employees will be relocated to other divisions of Google and Alphabet.
Industry watchers are interpreting the sale of Terra Bella as Alphabet's latest attempt to reduce losses incurred by its so-called "Other Bets," which is how the company refers to its divisions that aren't expected to generate significant profits. Alphabet's latest financial report revealed that this category of businesses lost over $1.08 billion during the fourth quarter of 2016, which prompted speculation that the tech giant is looking to offload some of its riskier operations. Given the latest developments, that forecast might have been accurate.