What does Google's Acquisition of Nest Mean?

Google and Nest

As you've probably heard by now, Google announced their $3.2 billion takeover of Nest on the 13th of January.

Much of the talk in the financial media has centered around whether or not this was a sound financial decision by Google, with many pointing out that the big G hasn't been particularly successful with their hardware company investments like Motorola.

Google is in the business of AI

What I think many of these financial analysts are missing is that Google is in the business of AI (Artificial Intelligence) - making machines do things just as well, or often better than, humans can.

Their use of AI shows in nearly everything that Google does from software selling and targeting advertising better than humans can, to producing robotic cars that can be driven by a blind person.

When you consider that Google also bought the advanced robotics company Boston Dynamics last month, it seems that Google is following an acquisition strategy of the sum of the parts becoming greater than the whole - or smarter than all others.

Nest is also in the business of AI

The Nest thermostat uses machine intelligence to learn your heating and cooling habits and then runs your HVAC system far more efficiently than a human can resulting in reduced energy consumption.

However, just the fact that both companies are involved in producing smart machines, isn't enough to see how the strategy of the sum of the parts being greater than the whole works...

Machine intelligence requires information

This is where things start to get a bit tricky. Learning algorithms require large amounts of data to train on, and once they've completed basic schooling, they can then find patterns in very large sources of data and potentially take action on patterns of information or activity that no human would ever notice.

Privacy concerns

Here is just some of the information your Nest thermostat knows about you:

  • When you're at home
  • When you're likely to be at home
  • The type of energy you use - IE gas, oil or electricity
  • When used in conjunction with Nest Protect, it may even know which room you're in

When you put this together with the other means of data collection Google has on you via Android phones, web search, email, document sharing, video watching, advertising and analytics, and even the Chrome web browser, you can see why some people are becoming quite concerned about their privacy (not to mention the NSA appears to collect data from Google).

Here are just some of the things being said about Google, Nest, and Privacy:

In this blog post, Nest founder and VP of Engineering Matt Rogers said, "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."


Google's strategy of building increasing levels of machine intelligence will probably pay off in the long run and they have deep enough pockets and huge cash inflows to support that.

Using any kind of smart technology will continue to erode the kind of old fashion privacy people had before computers became so prevalent.