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The two companies in question are Massachusetts' Boston Dynamics and Japan's Schaft. They were already slated to participate in the DARPA Robotics Challenge, or DRC. It's a military-sponsored competition that sees teams enter their robots to complete a number of complex tasks, such as scaling a ladder or clearing debris.
Boston Dynamics has a $10.8 million DARPA contract to provide its impressive ATLAS robots (pictured) and tech support to the competition. Schaft was founded explicitly to compete compete in the DRC, and received $2.6 million from DARPA to do so.
Google has announced that the companies will no longer be accepting DARPA money, though both will still compete in the contest. Google knows there's far more money to be made in the general consumer market, and associations with the military can make the company a lightning rod for controversy. Likewise, DARPA would rather use its budget to help fund fledgling companies rather than those owned by a tech giant such as Google. Simply put, neither entity is totally happy with the situation. They are a bit stuck with each other until the DRC takes place, which is scheduled for some time between December 2014 and June 2015.
The Verge calls the situation "a shotgun marriage" that will see Google and DARPA "forced to share parental duties for at least a year."