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Alphabet’s drone division drops deal to air-deliver Starbucks

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Project Wing is struggling to take off

Alphabet Inc.

Alphabet Inc.’s Project Wing, the drone delivery team that began as part of the Google X “moonshot” factory, has canceled a tentative partnership with Starbucks, according to Bloomberg. Members of Project Wing and Starbucks apparently clashed over the handling of consumer data, Bloomberg reports, straining the partnership and ultimately pushing both companies out of an air-delivered coffee venture.

The deal would have marked Project Wing’s second high-profile food and beverage delivery pilot program, after a deal with Chipotle was finalized back in September. That partnership culminated in burrito deliveries by drone to a small number of students and faculty at Virginia Tech, though the minds behind the project have said the burrito drones were simply a beta test for bigger things.

More telling for the fate of Project Wing is the direction of the division now that former project head Dave Vos left Alphabet in October. Bloomberg reports that the company froze hiring at Wing following Vos’ departure and began telling some employees in the division to relocate to other projects in and around Google. So the disintegration of the Starbucks deal is just one of the setbacks in the division’s larger struggle to grow from a kind of innovation lab into a full-fledged business.

Alphabet’s X division had no comment on the news, but did offer a statement to Bloomberg saying that it is “developing the next phase of our technology, and as always are thinking in a very broad way about all the potential use cases for delivery by unmanned aerial systems."

The report is just the latest to underscore some of the tensions playing out across Alphabet’s many sprawling interest areas. Since the massive restructuring in August of 2015 that created Alphabet and separated out Google from the corporation’s more costly and forward-looking endeavor, Alphabet has applied pressure to its various units outside of Google and Android to cut costs and headcount while turning a focus toward profitability.

Smart home appliance maker Nest, another Alphabet subsidiary, lost its CEO and co-founder Tony Fadell back in June. Access, the new division created to oversee Google Fiber, said last month it would replace division chief Craig Barrat and pause fiber deployment in new cities. And instead of focusing solely on fiber internet, Access is now looking into wireless gigabit internet to circumvent the high costs of fiber.

It appears Wing is facing similar scrutiny. The Federal Aviation Administration granted Wing a commercial testing exemption in August, as part of a White House initiative to kickstart drone development. However, as the Starbucks deal sours, it looks like drone delivery is proving challenging on multiple fronts, from the logistics of working under FAA regulations to the management and leadership hurdles involved with operating an Alphabet subsidiary no longer protected by Google.

For what it’s worth, Alphabet remains confident that, with enough time, it can work out the kinks and expand beyond food and drink into truly transformative sectors like emergency medicine delivery. “I don’t want to minimize the challenges for the Wing project. We need to make things that can successful move long distances completely autonomously with very high levels of safety and reasonably inexpensively. That is not a solved problem,” Astro Teller, the X chief who now oversees Project Wing personally, told The Verge in an interview published earlier today. “There are a lot of as yet unsolved problems.”

Update 6:35PM ET 11/8: Clarified that Alphabet’s X had no comment to share with regards to Project Wing’s Starbucks deal or the hiring freeze.

-Source: Bloomberg