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TheStreet Open House

Google and the Department of Defense Fight the Cyber Cold War

Stocks in this article: GOOGLLMTBAGEYNDXBIDUGOOG

NEW YORK (TheStreet) -- Google (GOOGL) has now surely been enlisted into what I call the Cyber-Cold War.

Its purchase of Skybox Imaging completes a trio of defense-related acquisitions over the last year.

The other two pieces are drone-maker Titan Aerospace, bought earlier this year, robot maker Boston Dynamics, bought late last year. 

These are the big three technologies in the next stage of national defense.

Whether Google originally wanted to evolve into part of the defense establishment is not the point -- it's now a de facto part of that establishment. For investors, the policies of our defense establishment, and the politics behind them, are not the point either.

Google is not going after military contracts the way companies such as Lockheed-Martin (LMT), Boeing (BA) or even General Electric (GE) do. Instead it has bought technologies of serious military interest, and the Department of Defense's interest in that technology did not end with Google's purchases.

Google's search capabilities and cloud infrastructure are also essential elements in national defense. Control of cyberinfrastructure, and the talent that makes the most of that infrastructure, is now the very definition of national power.

That's why Russia has Yandex (YNDX) and China has Baidu (BIDU).

Google started with a mantra of "Don't be evil." So did the U.S., in different words, in the Declaration of Independence. What must be done to sustain a nation or business in a complex world always turns such black-and-white notions into shades of gray.

As the reality of Google's new turn toward robots, drones and spy satellites has sunk in, its shares have begun to go sideways, with (GOOGL) down 2.02% and  (GOOG) is down 3.2% so far this year, against a 3.8% gain for the Nasdaq.

What this tells me is that investors are now in the process of deciding whether this trend is a positive or a negative for the company.

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