Will Nest and Google Play Nice?

Google’s $3.2 billion acquisition of Nest Labs ends one curious chapter for the smart thermostat maker. But it starts what’s likely to be a more wild ride.

Since December, rumors have been flying around Silicon Valley that Nest was up for sale. Apple was frequently bandied about as an acquirer, likely because Nest co-founders Tony Fadell and Matt Rogers were key executives there and hired away many of their colleagues. But those rumors were false, according to people close to Apple, and new rumors that the three-year-old company was looking to raise more money heated up. 

Nest CEO Tony Fadell said today that the deal with Google came together after partnerships discussions last year.

It came as a surprise to executives throughout the technology industry. Mr. Fadell and his team had long discussed their ambitions to build a massive standalone company and to reinvent every “piece of white plastic” in consumers’ homes. But selling hardware to the masses is expensive and capital intensive. Mr. Fadell said Google would allow the company to "change the world faster" in a blog post.

But a deal with Google comes at a cost: dealing with Google. In many ways, Google is a low-risk partner for Nest. Google has a strong track record of keeping some divisions fairly independent, and Google's CEO Larry Page is deft at managing big executives with big ideas. But an alliance with the technology giant, whose ambitions appear to have no bounds, is likely to be a complicated one.