My take on the Waymo-Uber Fiasco ($225 Million Settlement)

waymo
settlement
uber

(Brandon Bhangoo) #1

Yes, it's a fiasco, after all, why wait for the trial to hit the billboards you either settle out of court before it goes to court, or you settle towards the end when you know you are going to lose. You don't settle after a few court appearances and especially when you seem to be winning.

There is much more to this trial than we see, behind the scenes has a lot of hidden facts that we can only make assumptions, and assumptions might be right but more often than not just lead to conspiracy theories.

Let's take a close look at the case and what we know to be "reported facts" as they were divulged in court. There are four sides to this case, Waymo, Uber, Levandowski, and Kalanick.

Waymo

Waymo is Googles AV technology division; it is where Alphabet intends to dominate world transportation through driverless cars that provide Google with cameras everywhere. Think about it, Google is all about information, and one of its major backers is the CIA. So, imagine a world of driverless cars all equipped with camera's and now give the intelligence community access to these cameras. If you think CCTV is an invasion of privacy, you have no idea what AV will do to that issue.

Waymo is by far the leading light in AV, only because it started out as an AI exercise that developed into a fully comprehensive business plan for the future of Google. It connected Google to the car industry and eventually to the rideshare industry. Waymo employs many engineers to develop competent solutions for AV, and AV is all about making a computer system "comprehend" or understand" where it is in a four-dimensional world.

One of the Waymo Engineers, Anthony Levandowski, stole 14,000 files from Waymo when he left the company. The case Waymo is making was that Uber stood behind the decision and that Levandowski and Uber are directly related to the theft. Another issue that was raised was the impact of "stealing" experts from competition and the IP knowledge that these experts amass while working for the competition. The issue of the files was a "hard evidence" issue, but the issue of stealing experts with knowledge was far more important and was perhaps the crux of the case.

Levandowski

One of Waymo’s engineers, Anthony Levandowski was a loose cannon. It appears that this cowboy spoke tall but delivered short. Levandowski was upset by the slow progress that Waymo was taking, and wrote man times to Larry Page, Alphabet’s CEO and co-founder of Google that he needed to step up the trial and testing stages. Page ignored Levandowski, so in retaliation, Levandowski started to set up shop with partners to create Otto, a freight AV company that wanted to concentrate on AV trucks rather than cars. There is no real difference between the two, except that trucks are harder to handle than cars due to their size and structural flexibility.

During the time that Levandowski was setting up shop, he was courting Lyft and Uber. Lyft turned him down, while Uber accepted his offer after a lot of negotiation where Kalanick agreed to pay through milestones $680 million for Otto’s knowledge. During the negotiations, the 14,000 files were known to Kalanick, and he told Levandowski to destroy them. Kalanick wanted Levandowski for his expertise and saw him as the source of the knowledge.

Levandowski is also noted for claiming that there were technical issues in the Lidar hardware being developed at Uber. Which goes to prove that Levandowski's input was far more important than documents since the IP knowledge the engineer brings with him is what Uber and Kalanick thought they were buying.

Levandowski did not comment during the trial and was being called up in a few days where he would have taken the 5th. The amendment that allows a person to "not self-incriminate" themselves during a trial.

Kalanick

Kalanick is not one to spare words; he is a brash and outspoken individual that has put his company and himself in many awkward situations. According to Waymo, Kalanick not only knew of the stolen files but was ready to take Levandowski and the files to beat Waymo in the AV race.

Kalanick's claimed during the trial that he was upset by Levandowski's poor performance and that the whole Otto deal was a sham from the start. He claimed that Levandowski not only missed all the milestones but led them into the shit storm that was the Waymo-Uber trial fiasco.

Basically, what Kalanick was trying to state is that not only did Uber not get any of the 14,000 documents, it also didn't get an expert with IP knowledge.

Uber

Uber is not Kalanick, sure, Kalanick is the founding father, but today, Uber is a global company with a lot of private investors and operations that span the globe. CEO Dara Khosrowshahi is the opposite of Kalanick. He is a dedicated, focused and diplomatic leader. He does not speak before understanding what is being discussed and does not make any claims unless he can back them up.

Uber did not want this trial and courted Waymo before it started. Negotiations started with Waymo's claim for $1 billion in cash. It then moved to $500million in equity and finally settled on 0.3% of equity, which at the current Uber value of $72 billion is around $245 million.

While the money is important, it is not the main issue. What is important to Waymo is that Uber does not have and never will have access to the 14,000 documents. Also, Uber does not have access to IP through employing Waymo engineers.

The Stroz report added to the insult and injury of employing Levandowski. It showed how badly Uber was being run by Kalanick and proved that Kalanick did not know of the 14,000 documents until it was too late, and he is noted for demanding that Levandowski destroy them.

Bottom Line

The bottom line is that Khosrowshahi has eliminated a potential ball breaker, even if the court didn’t go his way. The time and effort spent on dealing with the case are best served to focus on AV research and development. The money issue is a non-issue, where Uber does not have dish out any cash, even if they have enough, it is better used for investing in their IPO then in paying Waymo. Waymo gets to clean up any IP issues and hopefully retain their advantage in AV technology development. They also get a small share in Uber, which is always good for the books.

In regard to IP issues, the case brought to light one of the core issues in venture piracy, where experts are being stolen for their knowledge. Files and patents are much harder to circumvent, but an experienced engineer is swayed by better income opportunities.

Personally, I don't know what stood behind Khosrowshahi's decision; I can only guess that it is based on his world vision where Uber and Alphabet become partners and not enemies. In this vision, Uber wins hands down and kills two birds with one stone.


Uber vs Lyft in 2018--Prices, App, Service Options, Customer Support Service, Coverage, Innovation and Brand Image
The Car Industry Wakes Up--Wants in on Rideshare Market
iAV--Apple's Tech for Autonomous/Driverless Cars of the Future
Uber, Apple and You--How Uber is Getting Special Access on iPhone
The Driverless Car Race is Heating Up--Uber Wants to be the Leader
UberAir--Uber's Personal Flight Venture
Tesla and Waymo's Big Data Management Competition
(Peter Dave) #2

What I don’t get is this; if Kalanick is guilty then the deal is OK, it saves Kalanick and Uber. However, to prove this, Waymo needed to prove that Kalanick was behind the theft of documents, something that looks impossible. So why the settlement? I understand that Waymo settled since it got them a cash bonus in Uber equity and saved Larry Page from testifying. I understand why Khosrowshahi made a deal, it cut down a waste of energy and further embarrassment to Uber. The figure that they agreed upon is also paltry, when considering the implications. So, why was this trial even taken on? What purpose did it really serve?
My opinion: It was a lot of over inflated ego on both sides, and the back room deal took too long to complete, so Waymo went to trial just to pressure Uber in finishing negotiations quickly.


(Steve Mann) #3

This wasn’t about ego, it was about Page going bananas over IP theft and taking it out on Uber. End of the day, Uber lost, they had to dish out 0.3% of their equity, and while they didn’t admit, the deal proves that something stinky was going on and they wanted to hide shit. Waymo agreed because they were going to lose the case, but would spill a lot of “shit” about Uber along the way. So the deal was to keep things quiet.


(Andrew Martin) #4

I don’t think this was an ego trip, I actually do think it was purely a lesson in who can wield a bigger stick. In this case Google could drag out Uber over a barrel and cover them with tar and feathers. The amount of shit that Google could find on Uber, well lets just say that Uber got off lightly.