The defence program, called Project Maven, set off a revolt inside Google, as factions of employees opposed Google technology being used in warfare. The dissidents said it clashed with the company's stated principle of doing no harm and cited risks around using a nascent artificial intelligence technology in lethal situations.
Google plans to honour what is left of its contract on Project Maven, the person said. More than 4600 employees signed a petition calling for Google to cancel the deal, with at least 13 employees resigning in recent weeks in protest at Google's involvement, according to a second person familiar with the deal.
Through Project Maven, Google provides artificial intelligence technology to the Pentagon to help humans detect and identify targets captured by drone images. Company executives have defended the contract, saying its cloud computing and data analysis tools were being used for non-offensive tasks and would help save lives.
Tech publication Gizmodo first reported that Google Cloud chief executive Diane Greene told employees last week Google's role in the program would end.
A source confirmed that, but Google declined to comment.
More than 700 Google employees had joined an online group inside the company called Maven Conscientious Objectors, using it to vent their concerns about the project and discuss ways of protesting against it.
Some employees planned to hold a public rally in San Francisco in July, coinciding with a Google conference, according to one source. Company officials have told employees in recent months that the deal was seen as a gateway to further, more lucrative government work, the source said.
As Google ventures into new territory, a group of nine people are working on a set of ethical guidelines for any future military contracts. The guidelines will be released, "very, very soon," Google chief executive Sundar Pichai said in a recording of a staff meeting last week reviewed by Reuters.
Maven had an initial budget of US$70 million. Google has told employees it was getting less than US$10 million for its work on the program, according to one source who requested anonymity because the information has not been made public.
Selling cloud computing services, including the object detection tool being used with drone footage, is one of the top areas Google is counting on to diversify revenue. But Amazon.com
Google in August 2017 hosted defence executives to demonstrate its artificial intelligence capabilities, according to a document shared with Google employees and seen by Reuters.
An internal email sent in October 2017 entitled "MAVEN Kickoff Meeting Notes" quoted deputy secretary of defense Patrick Shanahan as saying during a meeting with Google that he wanted "a built-in AI capability" in all future Department of Defense systems deployed in the field.
The email was shared with the Maven Conscientious Objectors and Reuters viewed it on the group's online forum.
Google declined to comment on internal documents and messages seen by Reuters.
Project Maven includes several subcontractors. Pentagon spokeswoman Major Audricia Harris said in email to Reuters on Friday that the Pentagon values "all of our relationships with academic institutions and commercial companies involved with Project Maven".
The primary contractor on the project, ECS Federal, did not respond to a request to comment.
Reporting by Paresh Dave, Heather Somerville and Kristina Cooke. Editing by Rosalba O'Brien and Tom Brown