Google buys Dropcam for $555 million to get into video security

Google’s Nest Labs plans to acquire Dropcam, the video monitoring start-up, for $555 million as it tries to gain a bigger foothold in the fast growing market for connected devices in the home.

The deal, announced late Friday, will help Google quickly expand its product line of home appliances, which already includes smoke detectors and thermostats through its Nest division. Google acquired that business for $3.2 billion earlier this year and plans to fold Dropcam into it.

“Although this was a big decision for us, it wasn’t a difficult one to make,” Matt Rogers, Nest’s founder, said in a blog post. It went on to say: “Many of you already own Dropcam products and have asked if we could make them work with Nest. Today, we’re one step closer to making that happen.”

Dropcam, a maker of home security cameras, has grown rapidly since its founding in 2009 for the ease of use of its products. People can monitor their home’s online and receive alerts when there’s movement inside. Dropcam also lets customers store their video footage on its computers as a subscription service. As a private company, it does not disclose details about its sales.

The acquisition brings up inevitable questions about privacy, an issue that Google (GOOG) must constantly address given all of the personal information it collects about users of its online services. To counter those fears, Nest said that it wouldn’t share any data about customers with Google or any other company without a customer’s permission or bombard them with ads.

“Nest has a paid-for business model and ads are not part of our strategy,” Rogers said. “In acquiring Dropcam, we’ll apply that same policy to Dropcam too.”

It’s notable that Google tried to distance itself from the deal, perhaps because of the sensitivities. Although a division of Google, Nest said it would be the one buying Dropcam while avoiding mentioning Google at all in its press release.

The teams from Nest and Dropcam will combine forces after the close of the deal, which still faces regulatory approval. The connected home space is potentially huge with companies jostling to build and sell everything from refrigerators to door locks to lighting systems that are tethered to the Internet and can be controlled from anywhere.

“Eventually, the plan is for us to work together to reinvent products that will help shape the future of the conscious home and bring our shared vision to more and more people around the world,” the blog post said.

Google, of course, started as an Internet search engine, but has, in recent years, taken a big shift beyond its roots into driverless cars, smartphones and robots. Acquiring Dropcam is just one more example of the company’s broad ambitions, which are driven by efforts to keep up growth after already conquering the Internet and online advertising.



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