While Competitors Build Scale, Google Builds Energy Reserves

Maybe Larry Page furiously pounded his desk in Mountain View when he learned of the Microsoft-Skype deal. Maybe it really screwed up his morning. Or, maybe, and, possibly more likely, he hit a speed dial key and said “Looks like we’re just going to have to build it now, instead.”

In an age of increasingly camera-equipped laptops and tablets, it is not difficult to imagine how Google could turn its Gchat into a Vchat virtually overnight, with or without the acquisition of Skype. Buying the eBay castoff could have sped along the process, but so many Internet users have adopted a Gmail address that a video component would establish immediate scale. And, by simply employing voice recognition technology, Google could easily turn Vchatters’ discussions into marketing gold mines.

But, once again, when Google tried to make a buy, market forces conspired against it, and this time, Microsoft snatched up Page’s dance partner. Google made overtures to Facebook and to Twitter, but came away with nothing. Groupon? Google practically validated its business model with a buyout offer, drew attention to the industry and helped generate the excitement that would launch a thousand knock-offs. Andrew Mason ought to cut Larry Page a commission check for being a catalyst that got his company, like, almost a billion bucks. There might be no better advertisement for entrepreneurs to VC backers than Google even showing the slightest sign of interest in an acquisition.

However, Google doesn’t need to buy Groupon—it can build its own. The same could be said for its attempted forays into social media. As for Twitter and Facebook, Google’s forthcoming Social Circle is apparently flying too close to Facebook’s territory for the social network’s comfort. So close, in fact, that it hired a PR hit squad to go out and stoke bad press about Google. And, one day, expect that a Google-based video chat will emerge, even though Microsoft won the day.

So, what can’t Google afford to not buy into? Wind power, clearly. Google has plowed cash into wind power operations from Oregon to Oklahoma and overseas, too. Its subsidiary, Google Energy, can buy and sell electricity on wholesale markets, and the company still plans to add on top of the hundreds of millions of dollars in wind energy investments it has already made. With the company’s existing capital reserves (remember, they can’t seem to buy an Internet company), Google could wait out electricity prices until they plummet and acquire oodles of the commodity. They’ll never stop using it, so Page might as well stock up.

No, Google’s data centers run through more energy than Al Gore and his entourage on a book-signing tour. If it were not already apparent why the world’s biggest search engine is lining up alternative energy plays, a recent white paper on renewable energy published at the company’s blog makes it crystal clear: their data centers are increasingly being made dependent on wind power.

If cap and trade ever became law—unlikely at best in the 112th Congress, but certainly feasible long-term—Google’s continuing foray deeper into the alternative energy industry could set it up to reap windfalls in tax incentives. But that’s not the best financial incentive for Google’s alternative energy play. A filthy chunk of coal powered the industrial revolution of the 20th century and a stiff breeze will carry this century’s digital revolution. If, and when, Google’s plans come to fruition, the company could very well become the world’s first perpetual motion search engine. That’s way cooler than any amount of money Facebook, Twitter, Groupon or Skype would have made it, their shareholders will one day attest.