The lawsuit involving two of Silicon Valley’s most high-profile companies had the potential to reshape the fledgling self-driving-vehicle industry. Instead, the fight between Waymo and Uber over alleged stolen trade secrets ended Friday with a settlement.
After months of anticipation and delays, the trial was scheduled to enter its fifth day Friday morning when a Waymo lawyer announced a deal had been struck. Under the terms of the settlement, Waymo will receive a 0.34 percent stake in Uber, which adds up to a current value of $245 million.
That’s significantly short of the $1 billion that Waymo had originally sought in damages. But the settlement further includes an agreement that prohibits Uber from incorporating any of the confidential hardware and software technology at the heart of the lawsuit into its self-driving systems.
With that stipulation, the settlement leaves the companies’ self-driving programs largely where they started. Waymo remains a front-runner in the industry while Uber trails behind. Sam Abuelsamid, a senior analyst with Navigant Research, recently developed a leader board that ranks the status of major companies developing automated-driving systems. In that analysis, Waymo ranked second, while Uber was 17th of the 19 companies measured.
“While we won’t agree on everything going forward,
we agree that Uber’s acquisition of Otto could and should have been handled differently.”
– Dara Khosrowshahi, Uber CEO
“It’s largely the status quo,” he said. “Based on what we’ve seen on various Uber vehicles and the fact a lot of people have left the Uber program over the last 12 months, they’ve been struggling a bit. They probably haven’t been using much of anything they might have gotten from Waymo anyway, so it may not have much effect.”
Waymo had claimed that Anthony Levandowski, once a prominent engineer on its self-driving-car project, had stolen more than 14,000 documents related to the development of its autonomous-vehicle technology and lidar units, sensors that help automated vehicles decipher the environment around them. Levandowski resigned from Waymo in December 2015. By August 2016, he had sold his startup self-driving-truck company to Uber for a reported $680 million.
In May 2017, Uber fired Levandowski, with a company attorney saying he hadn’t responded to requests to help investigate Waymo’s claims of infringement on its proprietary technology.
During court proceedings this week, Waymo sought to portray the former engineer as Silicon Valley’s version of Gordon Gekko, the fictional corporate raider at the heart of the 1987 movie Wall Street. In 2016, Levandowski, pictured below, texted a link from the movie’s defining scene to his boss, former Uber CEO Travis Kalanick.
In the scene, Gekko, played by a slick-haired Michael Douglas, extols the virtues of greed. Along with the link to the scene, Levandowski had texted, “This is the speech you need to give ;)”
Despite the trial’s settlement, Levandowski’s problems aren’t over. Separately, the U.S. Department of Justice has been probing the allegations regarding the theft of trade secrets.
In a statement regarding Friday’s settlement, new Uber CEO Dara Khosrowshahi maintained the company’s position that no trade secrets ever reached Uber’s offices. He nonetheless expressed contrition for the way the company’s purchase of Levandowski’s truck company, Otto, was handled.
“While we won’t agree on everything going forward, we agree that Uber’s acquisition of Otto could and should have been handled differently,” he wrote. “The prospect that a couple of Waymo employees may have inappropriately solicited others to join Otto, and that they may have potentially left with Google files in their possession, in retrospect, raised some hard questions.”
How the relationship between the two companies continues to evolve raises more intriguing ones. Back in 2013, Google Ventures invested more than $257 million into the ride-hailing company at a time it was valued at roughly $3.5 billion. Though the $245 million stake obtained via the settlement comes when Uber’s valuation is approximately $72 billion, it still means that Waymo’s parent company, Alphabet, has an increased stake in Uber.
With the $1 billion that Alphabet invested into ride-hailing service Lyft via another investment arm last October, Waymo has broadly ramped up its stake in the two biggest ride-hailing networks, and that could mean that both are eventual customers for the self-driving systems that Waymo intends on producing on a large scale.
“It wouldn’t surprise me to see Waymo both deploying its own services in its own brand, and then using both Uber and Lyft as other means to get their vehicles out on the road,” Abuelsamid said. “Everyone is hedging their bets right now, and nobody wants to be locked out.
“But if you can utilize those services at the same time you develop in-house services, there’s the potential to grow your business faster and hit scale faster with your autonomous vehicles.”
In other words, despite the lawsuit and its settlement, it will likely pay off for Uber and Waymo to remain frenemies for a long time to come.