Google Announces its Plans of Acquiring Nest Labs for $3.2 Billion

Association of Strategic Marketing
January 17, 2014 — 1,503 views  
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Looks like Google is on a spree of acquiring every company that comes in its sight. The latest one to catch the fancy of Google is Nest Labs. In a recent announcement, Google revealed that it plans on acquiring the company for a whopping $3.2 billion. Nest Labs is a company that makes thermostats. The surprising part is not that Google is planning on acquiring Nest, but that it is ready to shell out over $3 billion for this deal. The market is abuzz with the news that Nest barely has the level of defensible technology for the sum of money it is being paid.

Is the Deal Worth it?

However, Google cannot be that careless with its dealings. So what is it that made it settle down for this deal? Perhaps a look in detail in the kind of thermostats Nest Labs manufactures will help in understanding this. Nest Labs does not make ordinary thermostats. Its thermostats are smart, the ones that can be connected with the internet and not the ones that you spend hours on just trying to figure out the settings. This means that Nest's thermostats are the kind that understands when you leave the house, the moment you get into your room, and so on.

Nest Claims Sticking to its Privacy Policy

So perhaps with this deal, Google will possess the technology which will allow it to know when exactly you are feeling too cold or warm. It will get to know when you leave your house or when you get in. However, Nest claims that it won’t be giving out any access to Google to get its data as it is against the privacy policy of the company. Nest naively said that its privacy policy does not allow it to use the information related to its customers for any other purpose except using it for improving and providing its own products and services. It said that it has always taken the privacy of its customers seriously and will continue doing so.

That is rather thoughtful, but if Google was not going to get any information out from Nest, why would it in anyway settle for such a deal? At present, Nest cannot really guarantee that it will be in the market after some six months given the habit of Google of buying companies for their technology and shutting them down later. So you never really know when Google brings in some changes in its privacy policy for making the best use of Nest.

Association of Strategic Marketing