Uber and Waymo have settled a high-profile lawsuit claiming that Uber may have stolen important information relating to its Lidar technology, which is used in self-driving cars. While the agreement might seem like a neat tie for both companies, Waymo has arguably come out on top.
According to the companies, Waymo will get a slim .34% stake in Uber at a $72 billion valuation (strange because its most recent deal valued the company at $45 billion). Though the new equity further ties Alphabet to Uber’s eventual success (Google Ventures has already invested over $300 million in the company), this offering is a meager olive branch. Waymo was originally seeking $2.6 billion in damages and it allegedly refused a more significant investment in Uber, worth $500 million, proposed in an earlier settlement bid. But what Waymo really wanted out of the suit was a strong assurance that Uber would stay away from its intellectual property. As part of this deal, Uber will have to sufficiently verify that it is not using Waymo’s technology in any capacity going forward.
Meanwhile, Uber can now assert, “we do not believe that any trade secrets made their way from Waymo to Uber, nor do we believe that Uber has used any of Waymo’s proprietary information in its self-driving technology.” More importantly, the ride-hailing giant gets to move on from this highly distracting public affair that isn’t doing much for its company image. Settling also limits the restrictions Uber may have ultimately had to acquiesce to had a trial proceeded. If Waymo had won, it could have more seriously hampered Uber’s autonomous efforts.
While Uber CEO Dara Khosrowshahi now gets one major hassle off his hands as he pushes the company toward an IPO, there’s no denying that the case deeply impacted the company.
“To me, Waymo had already won,” says Arun Sundararajan, author of The Sharing Economy and a business professor at NYU Stern business school. “What transpired over the last year has undoubtedly slowed down Uber’s autonomous vehicles program significantly.”
It’s been a rough year for Uber. In addition to this lawsuit, the company was put on public trial as employees started airing stories about abuse and discrimination and other misdeeds at the company. The company was sued by a woman raped by an Uber driver in India; she claimed that a company exec doubted her account and illegally obtained her rape records (the case was settled in December). As more rumors of misbehavior and shady tactics poured out, they painted a picture of a company run by brash white men willing to go any lengths to succeed. It’s unclear whether the repeated headlines tarnished Uber with customers, but the company has lost customers in certain U.S. markets this year.
Waymo’s lawsuit has been something of a backdrop to all this drama. The self-driving car company filed its complaint in February 2017, after Uber had already suffered some blows to its reputation. The company claimed that former Google employee Anthony Levandowski made off with 14,000 internal documents detailing various technology components before starting his own self-driving company, Otto, which was soon acquired by Uber. The complaint in and of itself served to halt the company’s progress on the self-driving efforts key to its future success. It also resulted in the departure of Levandowski and all his knowledge. As soon as the suit was filed, Levandowski was quick to invoke his right against self-incrimination and, three months later, Uber fired him.
It’s important to understand what Levandowski represented within Uber’s self-driving efforts. He was valuable, not necessarily for his ability to replicate the technology that he created at Google, but more for what he’s learned over the course of his career. “The knowledge of what doesn’t work can be a huge benefit and that is also part of Waymo’s intellectual property,” says Sundararajan. Essentially, Uber could have made a leap forward in the competitive sector by not having to waste time on trial-and-error efforts.
Amid litigation and the absence of Levandowski, Uber had to completely rewire its autonomous program–another major setback. Of course, it still has a significant number of employees it lured away from Carnegie Mellon’s robotics lab, but academic research methods don’t always translate into commercially viable products. There’s little information about the efficacy of Uber’s technology, though the company is planning to integrate it into 24,000 Daimler vehicles in 2019. The company continues to grow its Advanced Technologies Group.
For now, Waymo remains on top as far as self-driving technology is concerned. The company has the technology, a financial strategy, and the right partners to scale its vehicles. The question ultimately will be whether it can maintain that lead. The Lidar technology at the heart of this lawsuit will eventually, if not soon, be outdated. Competitors in the race to build cars that drive themselves are increasingly moving toward more advanced forms of Lidar. Some companies, like Tesla, are forgoing Lidar altogether and instead pursuing radar and camera technology to make cars see their surroundings. At this point, it’s impossible to say for sure who will win in this space, even if Waymo is in the lead for now. It’s simply too early.
And though it’s now able to forge ahead, Uber isn’t entirely off the hook. Khosrowshahi, eager to push forward with his vision for the company, still has to contend with ongoing federal criminal investigations over Uber’s use of technology to evade law enforcement and other probes into a major security breach in 2016.