One of the main issues that are being ascertained in the Waymo-Uber trial is the timeline leading up to when Uber bought Otto. The reason this lead up is important is that Waymo wants to prove that Uber had a hand in the decision-making process that led Waymo employed engineer Anthony Levandowski to download and steal 14,000 documents in order to sell them to Uber through a convoluted process that involved setting up a company and distancing the theft from Uber.
Otto co-founder Lior Ron testified in the third day of the trial and shed some light on this subject. According to Ron's testimony, Otto made a pitch first with Lyft and only after that failed, they moved onto Uber.
Alphabet, the parent company of Waymo, is suing Uber claiming that he stile files specifically for Uber and under Trevor Kalanick's direction. According to Alphabet, Kalanick inspired and directed the whole affair and is, in fact, the reason why Levandowski stole the documents in the first place.
According to Kalanick, acting as CEO of Uber during the time of the incidents, he indeed wanted to head-hunt Levandowski for his understanding and knowledge of the technology and use him to spearhead Uber's slow progress in the sector. However, according to Kalanick, Levandowski did not want to come to work for Uber. Instead, Levandowski preferred to set up his own venture together with partners.
According to Ron, the plan was not left Alphabet, he and Levandowski wrote to Alphabet CEO Larry Page (Co-founder of Google) requesting his help to speed up research and allow them to concentrate on rider fewer truck issues. An e-mail from Ron was sent to Page and signed by Levandowski, requesting that Page set up a second research team in parallel with the first one.
Draft of the email Anthony Levandowski sent to Larry Page.
While the mail reached its target, Page was not interested in driverless trucks and wanted to concentrate on cars. At the same time, Levandowski and Ron decided to open up discussions with both Lyft and Uber to see if they would be interested in the driverless truck route. They also discussed the possibility of Lyft buying out Otto.
According to Ron's testimony, they had a lot of options on the table and were not sure which direction to take. They realized that they were better suited for working with Google, but they also considered working for Uber since Uber was working in collaboration with Waymo at the time. Lyft showed no interest in Otto, so that did not go forward.
Due to a break up in relations with Uber, Waymo moved onto Lyft, and the break up came when Uber bought into Otto. According to Ron's testimony, the reason Levandowski left Waymo was to start up their Otto company and had nothing to do with Kalanick, Uber or Lyft.
Kalanick's input on the stand sent another message to the court. According to Uber, no files reached their company, and ay claims that Waymo makes are based on boundless fantasy. In fact, according to Kalanick, the issue is not about the files, it is about the talent behind the files. Waymo is trying to point the finger at Kalanick, not Uber, and is trying to prove that Kalanick is the mastermind behind all of Levandowski's wrongdoings.
Kalanick described the start of Uber to the court "When we first got started, imagine like six people being around a table and that's your whole team. Day in and day out you just dream what Uber could be. But as it grew you just have this huge thing. 15,000 people in basically every city in the world. Your job goes from being the team of six in the trenches … to empowering literally thousands of teams of six."
According to Kalanick, he was betrayed by Levandowski as well as Page, and in fact, is the victim in all of this rigmarole. He also claims that his own Chief Legal Counsel David Drummond had a hand in all the issue that caused him so much pain.
Kalanick claims that he wanted to work together with Alphabet and Page on their driverless car initiative (Waymo). He produced e-mails to back up his claims, where he wanted to discuss hearsay that Alphabet intended to set up a competing rideshare company using the driverless cars in direct competition with Uber.
An email from Kalanick to Drummond about rumors.
According to Kalanick, it was Page that was paranoid, and this was due to Uber's decision to set up their own team of researchers using engineers from Carnegie Mellon University in 2015. Kalanick stated that Page was very upset about Uber's direction and made it very clear that he was upset. Based on Kalanick's understanding of Page it was unclear how Waymo would act once Uber bought out Otto, but he knew that they would do something to stop the success of the new team.
Kalanick stated that Page was upset by the headhunting tactics that Uber used to poach talent from Waymo. The position that Uber is taking is to show that Page was not interested in the files, he was only interested in stopping the flow of talent from leaving his team in Waymo and moving over to Kalanick's team in Uber.
Kalanick told the court that Page said "He kept saying, 'You're taking our people, and you're taking our IP.'"
Intellectual Property (IP) is a major issue in any case, and in this one, it is the core of the case. IP is not just the files it is the people that created the files. It is the years of research, trial, and error. It is what the person knows and knows how to provide in the future.
Most research contracts include clauses that bar an engineer from working on the same type of technology for a few years after leaving an employer. In fact, many contracts stipulate this as a mandatory clause, which is their way of protecting technology from reaching the hands of competitors, or from enabling employees to set up their own company with all the knowledge they have.
In the Waymo-Uber case, we are finding that the issue is about Uber taking Levandowski, and Waymo claiming that Levandowski took IP in the form of 14,000 files. What has not been stated is what Kalanick claims is more of an issue, the loss of a core engineer, the father of most of the IP. This, Kalanick claims is the main issue and it turns out that Levandowski raised this particular issue with Kalanick during their negotiations.
Levandowski and Ron negotiated with Kalanick to protect them from any litigation that might come about due to "bad acts" arising from the deal. In this instance what Ron and Levandowski meant was the 14,000 files that Levandowski stole. To this issue, Kalanick stated that he had no knowledge of any wrongdoings performed by Levandowski, and id not know what documents he had or did not have. All that interested Kalanick was the fact that Levandowski and Ron were knowledgeable in the driverless car technology business, and that Levandowski had in fact proven experience from working at Waymo. Kalanick stated that he had a 15,000-employee company to manage, and the Otto Moto deal was just one issue to be dealt with during his global expansion initiative.
While his claims seem week, Kalanick plowed on to claim that he left his legal team to deal with all the issues, even though it was a $590 million deal. This sounds a bit farfetched, even for Kalanick. The issue of the files did come up in the delta, and according to internal reports, Levandowski told Kalanick of the disks he had stolen, whereby Kalanick ordered Levandowski to destroy the disks. He went on to testify that none of the files on the disks made their way to Uber and he eventually fired Levandowski for not meeting his contractual obligations. Kalanick went on to claim that employing Levandowski was the worst mistake he ever made.
Another area that Kalanick was asked to explain was about his use of the term "Cheat Codes." Uber counsel asked Kalanick to explain to the court what he meant by the term "cheat codes" which he sued in relation to agreements with Otto, and Kalanick replied that cheat codes are an "elegant solutions to problems that haven't already been thought of," he went on to describe Uber's algorithm for determining car wait time as a type of "cheat code." Waymo's attorney Charles Verhoeven didn't buy into that and cross-examined Kalanick; he asked: "In the context of video games, you know what a cheat code is?" To which Kalanick replied "Yes, but those codes in those games are put there on purpose by the publisher of the games and they want the players to have them. It's part of the fun of the game." To which Verhoeven contradicted Kalanick by stating that, "A cheat code allows you to skip ahead, allows you to skip a level and not do the work." Kalanick didn't have time to reply, Verhoeven turned to the judge and said, "That's it, your honor.
The Good, The Bad and the What?
What is coming out of this lawsuit is how things work in Silicon Valley. IP is really the issue and where people are traded for their knowledge, and the bottom line is dollar signs. What we are also seeing is how the media manages how the public loves or hates someone. In this instance, Alphabet (Google) is the victim, this large, no giant company, one of the biggest IT companies in the world is a "victim" of Uber, also a large IT company but nowhere near as amazing as Google. Alphabet comes with years of success, where whatever they do is good, their treatment of employees is considered to be the best in the world, which comes in strike contrast to how Kalanick is portrayed. In fact, let's look at the difference s between Kalanick and Page.
- Larry Page is the iconic co-founder of Google
- He is a brilliant mathematician and a clean businessman
- Google has a great image as a company that cares about its employees
- Google executive has no "sexual harassment" issues
- Trevor Kalanick is the "bad-boy" founder of Uber
- He is considered to be totally disrespectful of rules and regulations
- Uber is known for their bad treatment of the Uber drivers
- Uber had so many issues including "sexual-harassment" that Kalanick was replaced as CEO
So even before they reached court, Waymo had a head start all due to public opinion. Yet PR is not the reason for winning a court case (or is it?) Google is angry with Levandowski's theft of their documents. They are even angrier that Uber bought out Levandowski. This is backed up by internal email messages where Page is concerned that Waymo will lose Levandowski to a competitor, which is what happened.
The deal with Uber was not pre-orchestrated according to Ron, in fact in one message he claims that if Levandowski does not succeed in getting what they want from the deal, they will "destroy him."
Kalanick vs. Levandowski
Some marriages end up in a bitter divorce. This was the case with Kalanick and Levandowski, what started out as a great partnership slowly developed into a farce. It seems that Levandowski is more a talker than a deliverer of results. Even Waymo executives claim that he was charming, but not as efficient as they expected. This is perhaps why the personal IP issue is not being raised, Waymo does not see Levandowski as being the cause of the case, only the 14,000 files he stole.
Kalanaick and Levandowski traded many cryptic messages between themselves at the beginning of their affair, and these included such as Michael Douglas's video's "greed is good" from YouTube, and messages that included such phrases from Kalanick "Burn the village" and Levandowski texting "I just see this as a race, and we need to win, second place is first looser [sic],"
Based on Kalanicks testimony, he truly believed that Levandowski was going to leap from Uber's AV development years, bringing them up to or surpassing Waymo's progress. In reality, Levandowski did not meet any of the milestones. This was supported by Waymo's witness Nina Qi who stated that the case is not abutting Levandowski but about the files, Levandowski was a failure, and in fact, this is supported by Qi's projections regarding Otto 's performance.
Waymo analysis of the Otto acquisition for Uber, presented by Nina Qi
Why is this fact interesting, because when asked how many rides Waymo had performed with AV's 2017, Qi answered 295,000, and that Uber had made none. This fact goes to show that the issue is not about Levandowski or his IP knowledge, which is what Uber wants to claim is the reason for the case. Waymo is claiming that Levandowski is a dud and only the files are important.
The Bottom Line
This case is just warming up; there is so much to be discussed testified and divulged. The so-called "Stroz" report is coming out as damaging to Uber, this is exhibit no. 22 in the case and is a due diligence report made by Alphabet. It can be downloaded here:
The report details the assets and liabilities of Otto, and it is now becoming a major influencer in the case.