The Beginning
On March 15th, 2015, Google unveiled a breakthrough in one of its ambitious projects, marking a new phase in its pursuit of innovative technology. At an event with global mobile industry leaders, Sundar Pichai, Google’s product chief, proudly shared that what began as a wild experiment four years earlier was now proving to be a revolutionary idea.
“We are excited to announce that most of our balloons can now stay afloat for as long as six months,” Pichai announced, highlighting the drastic improvement from earlier tests when balloons could barely last for a few days.
This advancement set a new record, with a balloon remaining airborne for 187 days, circling the globe nine times and covering several countries across continents. Loon seemed poised to be Google’s first commercially viable breakthrough in its roster of moonshot projects, outperforming earlier endeavors like Google Glass and autonomous vehicles.
The Vision for Change
Launched under Google’s experimental division, X, Loon was more than a research project. X was designed to create transformative companies capable of solving major global issues. Loon’s success in offering internet access to remote areas, including a partnership with AT&T to support Puerto Rico after Hurricane Maria, demonstrated its potential to bridge the digital divide for millions.
As the project evolved, Loon’s leadership set clear goals. Mike Cassidy, one of the project’s early leaders, emphasized the vast business opportunity: “There are 4.5 billion people without internet, and even if only a fraction were to pay $5 a month, we’re talking about billions in revenue,” he explained.
The Business Strategy
In 2018, Loon became a standalone company within Alphabet, working to find a sustainable business model while still fulfilling its mission to improve global connectivity. The company’s focus shifted to emerging markets in countries like Kenya, Sri Lanka, and South Africa, providing internet coverage to underserved areas. During its 2020 launch, Loon’s fleet of balloons successfully delivered 4G connectivity in Kenya, with further expansions into Mozambique planned with Vodacom.
Despite the promising outreach, the project struggled financially. Funded by a $125 million investment from SoftBank in 2019, Loon quickly found itself operating at a loss, burning through an estimated $100 million per year. Though more cost-effective than traditional satellite technology, the balloon-based system still required several expensive balloons to maintain service, each costing tens of thousands of dollars. Regulatory issues further complicated matters, as governments in some countries raised concerns about the balloons, including fears of surveillance and radio frequency conflicts.
The Difficult Realities
Loon faced numerous obstacles: Indonesia’s approval was delayed due to rumors about surveillance equipment on the balloons, while Sri Lanka struggled to allocate the necessary radio spectrum. Additionally, the project’s innovative nature required navigating complex regulatory questions regarding airspace jurisdiction and governance in the stratosphere.
The financial hurdles were just as daunting. The business model struggled, especially in markets where many residents couldn’t afford basic mobile phones, let alone pay for internet access. With users living on less than a dollar a day, it became clear that Loon’s ambitious goals faced significant barriers.
The End of the Road
While the team initially believed the toughest challenge would be maintaining a stable connection between balloons and the ground, they soon realized the real hurdle was making people pay for this cutting-edge technology. The project’s complex business model couldn’t keep up with its operational costs, leading to the eventual decision to shut it down.
The Loon project serves as a reminder that even the most innovative technologies need strong business models to succeed. Despite its technical achievements, the reality of building a sustainable business proved to be more difficult than anticipated.
