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Google Nears Major Investment in SpaceX to Bolster Satellites

Google is close to investing in rocket maker SpaceX, according to several people familiar with the talks, creating a formidable alliance in Silicon Valley’s accelerating Internet space race.

The purpose of a deal, which is still in the works, is to support the development of SpaceX satellites that could beam low-cost Internet around the globe to billions who don’t have it.

The price and terms Google and SpaceX are discussing couldn’t be learned although one person familiar with them said Google has agreed to value SpaceX north of $10 billion and that the size of the total round, which includes other investors, is very large.

SpaceX’s investors include Founders Fund, Draper Fisher Jurvetson and Valor Equity Partners. The company, which has been developing rockets to lower the cost of space travel, hasn’t raised a primary round of funding in several years.

The Takeaway
Google is in the final stages of investing in SpaceX after its own effort to create an Internet-beaming satellite constellation unraveled.

SpaceX CEO Elon Musk outlined his plan for the pricey satellite project last week, calling it “a global communications system that would be larger than anything that has been talked about to date.” 

He said the system—comprised of thousands of satellites orbiting the earth at relatively low-levels—would likely take at least five years and $10 billion to build. It aims to provide an alternative to fiber-optic cable and to eventually allow Internet communications on Mars, which Mr. Musk wants to colonize.

Google had been pursuing a similar Internet satellite project under Greg Wyler, a satellite veteran. But Mr. Wyler left Google abruptly last year to pursue the plan on his own. He took the rights to some spectrum with him and announced last week that his venture, dubbed OneWeb, had received funding from Qualcomm and Virgin Group.

The Wyler-Google breakup left Google in the lurch, without the spectrum it needed for its project. Google CEO Larry Page and Mr. Musk, who are close friends, began discussing an investment in SpaceX.

The rival satellite projects are taking two different technical approaches. Mr. Wyler’s OneWeb, which envisions a constellation of 648 satellites, uses radio spectrum. Mr. Musk appears to be trying to get around his lack of spectrum rights by relying, in part, on optical lasers. Both efforts are ambitious and unproven, and industry experts have expressed skepticism about both plans.

The Wyler-Google breakup left Google in the lurch, without the spectrum it needed for its project.

As well as the huge technical stakes, there are big personalities at play and plenty of brinkmanship. After leaving Google, Mr. Wyler had considered working with Mr. Musk, whom he’s known for years. But a person familiar with the matter said that Mr. Musk wanted to own more of Mr. Wyler’s company than he wanted to give him. Last week, Mr. Musk dissed Mr. Wyler’s effort calling SpaceX’s technology more “sophisticated.”

Google is pursuing other plans for distributing Internet via the air, including balloons and drones. Some of those efforts are still run by Craig Barratt, the company’s senior vice president in charge of access and energy. The company last year bought Titan Aerospace, which sends Internet signals via drones, as well as Skybox Imaging, which makes small satellites for mapping.

Spokespeople for Google and SpaceX could not immediately be reached for comment.

—Amir Efrati contributed to this article.

Jessica Lessin founded The Information in 2013 after reporting on Silicon Valley for eight years for the Wall Street Journal. She writes a weekly column about all things tech, media and the wild ride both industries are in for. She can be found on Twitter at @jessicalessin.