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There are two sides to this story. The one I consider almost insignificant is that by honouring existing contracts, they have become a defence contractor in the literal sense.

The more important one is that by not doing new work for the military, they have just remove one of the hottest companies from the defence market.

I wonder whether the US government has ways of withholding regulatory approval of this deal because of this.

If they didn't buy the company, they would have to honor the contracts anyways. If they break the contract presumably they will have to face consequences, possibly paying money to DARPA so some other company can do it.

Besides not everyone believes DARPA is "evil".

Or they will direct their talents not to the military any more (after honoring existing contracts) to other more non-violent applications.

One can only hope.

That was my fantasy upon reading the headline: "Google acquires and renders harmless army of kill-bots"

Sadly, I'm afraid it was a dream.