Data Sheet—The Most Stunning Thing About the Uber-Waymo Settlement

I saw variations of the word “stunned” in the coverage of the settlement Alphabet and Uber reached Friday. I was stunned the suit ever went to trial at all.

I speculated in mid-November that it was “increasingly likely” the “nasty spat” would end in “some kind of split decision.” While someone—Uber, former CEO Travis Kalanick, disgraced engineer Anthony Levandowski—had done some unpleasant things, these probably didn’t include stealing and implementing Waymo’s technology, the burden of proof in a trade-secrets case. “Finding closure that doesn’t cost Uber billions will be a victory,” I concluded.

That’s pretty much what happened. Alphabet inflicted maximal embarrassment on Uber, which was shown at minimum to be deceitful. Then Alphabet took a sliver of additional equity in Uber that amounts to roughly $245 million. Uber removes a giant operational and financial risk.

It’s obvious why Uber settled. Why did Alphabet? The simplest reason likely is that it didn’t much like its case. And it liked it less as the trial got underway. Uber’s defense is that while Levandowski may well have taken files and while Kalanick behaved in an underhanded manner, Uber never used any technology belonging to Alphabet.

One oft-speculated reason for Alphabet’s settlement is that it didn’t want the reclusive Larry Page, Alphabet’s CEO, to take the stand this week. That’s silly. Page can more than handle cross examination; he’s a master at swatting away unwanted questions. The Atlantic’s Alexis Madrigal wisely wonders if Alphabet received some kind of ability to audit Uber to ensure it isn’t using Waymo technology.

And so one of the most curious business stories of our time remains so but moves forward. Alphabet is and continues to be a major investor in Uber—and in its primary U.S. competitor, Lyft. The same is true for SoftBank, which has invested in every other notable Uber competitor around the world. Uber still hemorrhages money but grows rapidly, primarily because it subsidizes rides (and food deliveries) with its investors’ money.

Can Uber be a business? With the Alphabet litigation resolved, we’re now closer than ever to knowing.

NEWSWORTHY

Aiming high. After pushing out studio head Roy Price amid sexual harassment allegations last fall, Amazon hired NBC Entertainment president Jennifer Salke to oversee its original content efforts. Salke, who said she's "honored and emboldened" by the new job, has her work cut out for her, as Jeff Bezos is aiming to develop a blockbuster hit as big as HBO's Game of Thrones.

Measure for measure. The Apple Watch isn't a big hit in comparison to the iPhone, or even the iPad, but compared to the regular watch industry, it's a monster bestseller. Apple sold about 8 million watches in the holiday shopping quarter, more than the entire Swiss watch industry combined, on a unit basis, according to Canalys.

Carrying the load. The major cloud server operators are spending a lot of money on their data centers. The nineteen largest–led by Amazon, Microsoft, and Google–spent a combined $64 billion on cloud capital expenditures last year, up 22% from 2016, with the total forecast to grow 27% this year to over $81 billion, according to RBC Capital Markets.

Fresh produce. Grocery delivery service Instacart bulked up its war chest with $200 million from private investors including Coatue Management and Glade Brook Capital Partners, Bloomberg reported. The move comes as Amazon is expanding its delivery business with its newly acquired Whole Foods chain.

New markets. Top contract manufacturer Hon Hai Precision Industry, also known as Foxconn, plans to go public in China this year and get into artificial intelligence and big data. “If we don’t keep moving forward, we will be eliminated," chairman Terry Gou told his employees on Sunday.

Aging quickly. Facebook is losing millions of younger users to rival Snapchat, according to eMarketer. The largest social network lost 2.8 million users under age 25 last year and could lose another 2 million this year, the firm said. Meanwhile, Facebook's Instagram is forecast to add 1.6 million younger users and Snapchat will gain 1.9 million. Of course that was before Snapchat's latest app redesign infuriated millions of its teens users.

Biased apps. Several leading facial recognition systems are much more accurate when dealing with light skinned faces than dark skinned faces, a study at the MIT Media Lab found. The problem comes from the lack of diversity in the collections of faces contained in the data sets used to train the algorithms.

How much hype. I'm not fan of the headline on this Wired piece about how Facebook stumbled in dealing with political news in the last election cycle, but there's a lot of fascinating insider tidbits.

FOOD FOR THOUGHT

Google has had so many fits and starts trying to crack the consumer tech hardware space that I've lost count (Nexus Q, anyone?). Lately, it's former Motorola president Rick Osterloh's job to get hardware sales on track and recent products have looked mighty appealing. New Pixel phones got rave reviews and I found the Pixelbook Chromebook highly usable. David Pierce at Wired profiles Osterloh and lays out some of the big challenges ahead:

Immediately upon his arrival, Osterloh set out with Rosenberg to find every hardware project happening at Google, no matter how small. They found more than a dozen projects involving upwards of 1,000 people. Some were working on Nexus phones, others on a new line called Pixel. There were hugely publicized long-term projects like Google Glass and the Project Ara modular smartphone. Some Googlers were building Chromebooks, others were working on a new kind of Wi-Fi router. No centralized structure connected these teams, nor was there an overall plan. Osterloh called it a loose federation, “the European Union of hardware.” And he didn’t mean that in a good way.

Osterloh centralized all that hardware under his leadership, giving 55 percent of those 1,000 employees a new manager. Rather than having an executive in charge of each product, Osterloh chose to implement a “functional” structure, giving his leaders oversight of a larger segment of the Google hardware organization. Ivy Ross, formerly head of Google Glass, was put in charge of all hardware design. Mario Queiroz ran product management. Ana Corrales, a longtime manufacturing exec and Nest’s CFO and COO, was tapped to oversee all things operations and supply chain.

IN CASE YOU MISSED IT

How the U.S. Courts Website Unwittingly Became a Cryptocurrency Miner By David Meyer

Apple TV App Gets Live News Broadcasts from CNN, Fox News, and CNBC By Jonathan Vanian

BitGrail Cryptocurrency Exchange Claims $195 Million Lost to Hackers By David Z. Morris

See the Breathtaking Way Drones Are Being Featured at the 2018 PyeongChang Olympics By Don Reisinger

Here's Why Nvidia's Stock Is Booming—Again By Aaron Pressman

Google Pixel Owners Sue Google Over Allegedly Faulty Microphones By Emily Price

MoviePass Continues Aggressive Growth Push With Limited-Time Theater-Plus-Streaming Bundle By David Z. Morris

BEFORE YOU GO

Writing can often be a solitary pursuit. And that may require a solitary place–think of Ralph Waldo Emerson at Walden Pond at the extreme. Novelist Thomas Maloney explored the idea of finding a special place for writing, what he calls the sacred combe ("combe" being a small valley), in an interesting essay last week.