Alphabet is shutting down Loon, its ambitious internet balloon venture

Hong Kong(CNN Business) A futuristic project by Google's (GOOGL) parent company Alphabet to provide internet from high flying balloons has burst.

Loon, the Alphabet subsidiary that used giant balloons to beam internet to people in remote areas around the world, has announced that it is winding down its operations.

It was formerly part of X, Alphabet's innovative "moonshot" factory.

In a Medium post announcing the news, Loon CEO Alastair Westgarth explained that the company's business model was ultimately unsustainable.

"While we've found a number of willing partners along the way, we haven't found a way to get the costs low enough to build a long-term, sustainable business," he wrote.

"We talk a lot about connecting the next billion users, but the reality is Loon has been chasing the hardest problem of all in connectivity — the last billion users: The communities in areas too difficult or remote to reach, or the areas where delivering service with existing technologies is just too expensive for everyday people."

Loon was born in 2011, with engineers using what they described as a "garbage bag-looking" balloon for an early prototype. The company went on to conduct years of tests, and in 2018, it was spun off from X to become its own Alphabet subsidiary.

The company based its technology on an eye-catching premise: that balloons would act as "floating base stations," which could cover a much larger area — about 200 times more — than a station on the ground. Its balloons were generally positioned about 20 kilometers (12 miles) above Earth.

In recent years, Loon had built a name for itself by connecting people during natural disasters. In 2017, it helped bring internet to tens of thousands of people in Peru after massive flooding, and after Hurricane Maria, it helped about 200,000 people get online in Puerto Rico.

Last year, the company also brought its balloons to Africa, marking the first commercial launch of a service of its kind in the region. Telkom Kenya, the mobile service provider it partnered with, said Friday that it would discontinue the pilot with Loon in March.

The news also marks the end of another strategic partnership. In 2019, SoftBank (SFTBF) unit HAPSMobile invested $125 million into Loon. The companies said they would team up to "bring more people, places, and things online." HAPSMobile did not immediately respond to a request for comment on Friday.