Google In Control of Your Thermostat

Google's second-largest deal ever expands Android into the Internet of things.

The Nest smoke and carbon monoxide alarm is shown at the company's offices on Tuesday, Oct. 1, 2013, in Palo Alto, Calif.
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Google is paying $3.2 billion to acquire Nest Labs, a developer of WiFi-connected thermostats and smoke detectors, in a move that will likely expand the use of its Android operating system to connect with smart devices.

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This is the largest acquisition Google has ever made with the exception of its 2011 purchase of Motorola Mobility for $12.5 billion. The Nest Learning Thermostat uses sensors to train itself to the behavior of people leaving and entering different rooms of the house, gathering data and becoming smarter.

Google is already expanding the use of its Android system onto car computer systems with its new Open Auto Alliance. Adding Nest's capability to develop a network of interconnected devices may help Google create products that know what users want before they ask for it. Nest devices are connected with iPhones but Google will likely also connect the products with its Android system.

The deal is expected to close "in the next few months," Google said in a company blog post on Monday announcing the deal.

"Nest's founders, Tony Fadell and Matt Rogers, have built a tremendous team that we are excited to welcome into the Google family," Google CEO Larry Page said in the blog post. "They're already delivering amazing products you can buy right now--thermostats that save energy and [smoke] alarms that can help keep your family safe. We are excited to bring great experiences to more homes in more countries and fulfill their dreams!"

Nest CEO Tony Fadell, who is a former Apple employee credited with helping to design the iPod, said in a separate blog post that he is excited the company he co-founded in 2010 is joining Google, which gave Nest venture capital funding in 2011.

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"Google will help us fully realize our vision of the conscious home and allow us to change the world faster than we ever could if we continued to go it alone," Fadell said. "We've had great momentum, but this is a rocket ship."

Nest's privacy policy limits the use of customer information to providing and improving its products and services. It is unclear what information sharing will take place when Google formally acquires the company, and how it might use information that tells devices what rooms you are in to track consumer behavior for advertising.

"By sharing data on whether something in the room is moving, the products better assess if you are away from home so temperature can be reduced you can save more energy," Nest's privacy policy explains. "Over time, Nest may provide the opportunity for you to interface Nest Products to one or more third party products and services, which will involve the exchange of information from your Nest Product. Your explicit consent and authorization will be required for this interface, and will be revocable by you at any time."

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