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.
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.
BITS AND BYTES
Intel switches self-driving car initiatives into fast lane with $15 billion bid for Mobileye. The Israeli company makes sensors that help vehicles detect things around them. Intel’s rival Qualcomm snapped up Mobileye competitor NXP for $47 billion last October. (Fortune)
Cloud upstarts Infor and Marketo are teaming up to take on much bigger rivals. Infor, which specializes in business management apps, and Marketo, a specialist in marketing automation, are tying their services together in order to compete more effectively with the likes of Salesforce and Oracle. (Fortune)
Anticipate a fierce fight between Uber and union advocates in Seattle. The city voted in 2015 to let Uber drivers—and by extension other “gig economy” workers—organize into unions, a decision that Uber is trying to block. Meanwhile, the company is barraging drivers with text messages and podcasts proclaiming the benefits for contractors to remain independent, plus it’s soliciting more feedback on how it can improve working conditions. (Wall Street Journal)
Millennials are buying into Snap’s stock. Seasoned investors are wary about the messaging app company’s growth prospects and structural considerations, such as the lack of voting rights. Newer ones are jumping in because they are “fans” of the technology. (Reuters)
Alphabet’s “moonshots” are starting to crater. As Google’s parent matures, it’s becoming clearer which of the company’s investments are its alpha bets—and which are not.
While most of Alphabet’s experimental initiatives make no money at all, several show early signs of promise. Subsidiaries such as smart-home device maker Nest, Internet provider Fiber, and medical disrupter Verily make up the majority of the company’s $809 million in non-Google sales.
Still, these “other bets,” as the non-advertising oddities are called, altogether account for less than 1% of the behemoth’s annual revenues—and $3.6 billion in operating losses. Fortune‘s Robert Hackett reports on the crash landings. Plus, there’s more leadership turmoil within the division seeking to bring Internet access to rural areas via high-flying balloons.
IN CASE YOU MISSED IT
Psst, Your Company Is Watching You Now, by Robert Hackett
Netflix Is Winning the Streaming Race—But for How Long? by Mathew Ingram
What You Can Expect from Fintech in 2017, by Chirag Kulkarni
Chinese-Backed Startup NIO Will Start Selling Self-Driving Cars by 2020, by Kirsten Korosec
How Luxury Watchmakers Can Compete With Apple, by Aaron Pressman
Here’s the Google Cloud News You Can Use, by Barb Darrow
ONE MORE THING
Get through airport security in the blink of an eye. Iris-recognition technology firm Tascent is working on systems for traveler checkpoints. But this scenario is at least two years away in North America. (Fortune)