Alphabet Inc’s (NASDAQ:GOOGL) Waymo and Uber Technologies Inc. have reached a surprise settlement in their ongoing intellectual property case. The settlement ends a year-long legal battle over whether Uber had stolen trade secrets from Waymo related to self-driving cars.
As part of the settlement, Uber will give Waymo 0.34% of Series G shares, valued at around $245 million. Alphabet already owned equity in Uber after investing in the ride-sharing company’s early funding rounds.
The suit began in February 2017 when Waymo accused former Google employee Anthony Levandowski of taking trade secrets with him when he left to form Otto, a self-driving truck company that Uber quickly acquired.
Federal prosecutors still have an open criminal investigation into Uber and Levandowski.
The Long Legal Fight
“Mr. Levandowski had confided in some Waymo colleagues that he planned to “replicate” Waymo’s technology at a Waymo competitor. As Waymo would later learn, Mr. Levandowski went to great lengths to take what he needed to “replicate” Waymo’s technology and then to meet with Uber executives, all while still a Waymo employee.”
Waymo further accused Levandowski of downloading over 14,000 highly confidential and proprietary design files related to Waymo’s hardware systems, particularly Waymo’s LiDar, a technology that Waymo claimed Uber was “more than five years behind in.”
Most damning for Uber, however, is Waymo’s claim that Uber, and then-CEO Travis Kalanick knew about or even directed Levandowski’s actions.
Levandowski was fired in May for refusing to cooperate with Uber in regards to the investigation.
During the first few days of the trial, Waymo presented evidence of Levandowski’s data theft. Kalanick himself testified to meeting with Levandowski while he was a Google employee. He said he was planning to buy out Otto before Otto even existed. Kalanick — who resigned in June amid mounting scandals and pressure from the Uber board — does, however, maintain that he had no knowledge of the theft.
When Kalanick testified, he also said that Google and Uber were like “big brother and little brother” until the two companies began to compete in the ride-sharing and autonomous-driving arenas saying that Alphabet CEO Larry Page became “sort of angsty.”
The settlement comes just a few days before Page would have testified.
Waymo and Uber Reach a Settlement
Regarding the settlement, Uber CEO Dara Khosrowshahi released a statement and said that his job was to “set the course for the future of the company: innovating and growing responsibly, as well as acknowledging and correcting mistakes of the past.”
He expressed “regret” for Uber’s actions in the acquisition of Otto. But Khosrowshahi maintained that he did not believe Uber had used any of Waymo’s technology in its self-driving vehicles.
Meanwhile, Waymo seemed satisfied with the settlement and hopeful for the future of self-driving cars:
“We have reached an agreement with Uber that we believe will protect Waymo’s intellectual property now and into the future. We are committed to working with Uber to make sure that each company develops its own technology. This includes an agreement to ensure that any Waymo confidential information is not being incorporated in Uber Advanced Technologies Group hardware and software. We have always believed competition should be fueled by innovation in the labs and on the roads and we look forward to bringing fully self-driving cars to the world.”
The Bottom Line for Uber and Waymo
Waymo clearly comes out the winner here. It got more equity in Uber — so it doesn’t lose everything if Uber’s self-driving technology ends up outpacing its own.
Uber got yet another bad headline. While neither of the employees at the center of the lawsuit is still with the company, more bad press is the last thing Uber needs as it approaches its initial public offering in 2019.