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The Alphabet Lawsuit Is a Huge Pothole for Uber

The Silicon Valley understatement of the first quarter of 2017 (so far) is that it has been a rough stretch for Uber. It seems as if the company faces a different scandal on a daily basis. They may all pale in comparison to the lawsuit Waymo, the self-driving car unit of Google parent Alphabet, has filed against Uber and a company it bought last year called Otto. The reason: an allegation of fraud.

Consider for a moment all that has been flung against Uber in recent memory. One of its own engineers posted a lurid account of her version of being harassed by her male manager and the company’s indifference to her plight. (CEO Travis Kalanick, claiming ignorance, hired former U.S. Attorney General Eric Holder to investigate.) The company’s long-standing practice of deceiving law-enforcement officials by digitally hiding its cars came to light; Uber promised to wind down the program. Kalanick himself, just since the beginning of the year, has resigned from an advisory council to President Trump, been videotaped chewing out a longtime Uber driver, promised to get “leadership help,” and publicly vowed to hire a chief operating officer.

Whatever your opinion of these and other alleged transgressions, they range on a continuum from reprehensible to icky to explainable. An allegation of fraud by the likes of Google is another matter altogether. According to the Waymo suit, the Google sibling company claims to have the goods on its former employee, Anthony Levandowski, downloading thousands of sensitive documents. (He left Waymo, founded Otto, and sold it last year to Uber.) Waymo’s suit further alleges an ability to prove that Uber has incorporated Waymo technology in its own self-driving offering.

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There are many permutations of weirdness here, including that another Google unit, the venture arm GV, is a major investor in Uber and that top executive David Drummond once was on its board. As well, Alphabet’s executive chairman Eric Schmidt is an investor in Uber.

Google/Alphabet is well acquainted with the “frenemy” concept. And yet, it is not an overly litigious company. It knows going to court against Uber will force the disclosure of details about Waymo’s business. In its lawsuit, for example, it claims to have invested “tens of millions of dollars and tens of thousands of hours of engineering time” in its self-driving technology.

Uber has called Waymo’s claims “baseless.” It will have an opportunity to discuss this further. On Friday Waymo asked a judge for an injunction to halt Uber’s self-driving business. A hearing is scheduled for April 27.