Google Lawsuit Could Be Fatal For Uber
When Anthony Levandowski loped onto the stage to accept the Hot New Startup award at an industry awards show in February, the trucker hat perched on his head served as a cringe-worthy nod to the millions of drivers his self-driving truck company is poised to leave jobless.
A few weeks later, it is the pioneering engineer of self-driving car technology whose job could be in jeopardy, and the lawsuit he is named in could pose an existential threat to an increasingly vulnerable Uber.
With deep pockets and a $70bn valuation, Uber has racked up a series of victories against regulators, taxi companies, and upstart competitors. But Uber will now go up against tech’s undisputed heavyweight champion, Google, while it is still on the ropes after a consumer boycott campaign and allegations of a toxic work environment.
A report by the New York Times that Uber misled the public by blaming a human driver for running a red light during the company’s short-lived self-driving trial in San Francisco further damaged both Uber’s and Levandowski’s credibility. The car was in fact driving itself when it ran the red light, according to two sources and internal documents obtained by the Times.
Levandowski, who runs Uber’s self-driving car program, is at the center of a blistering lawsuit against Uber that was filed recently by his former employer, Google’s self-driving car project, Waymo. He is accused of brazenly stealing critical intellectual property and trade secrets and using them to start his own company, Otto.
Uber’s $680m acquisition of Otto in August 2016 gave it access to Waymo’s secrets, the suit claims, which the ride sharing company is now using to bypass Google’s seven years and many millions of dollars-worth of research and development.
Waymo claims to have significant evidence of the theft, including logs of downloads by Levandowski and other Otto recruits, an errant email from a vendor showing that Otto’s LiDAR system, the system that allows an autonomous vehicle to navigate, bears a “striking resemblance” to Waymo’s own design, and documents Otto filed with the Nevada state government.
The suit also alleges that Levandowski met with “high-level executives” at Uber’s San Francisco headquarters while he still worked at Google, and one day before he formed the company that would become Otto.
The engineer made Google a world leader in self-driving cars. Now the company is accusing him of stealing its secrets and taking them to Uber.
The lawsuit filed by Waymo, formerly Google’s self-driving car unit, claiming Uber stole trade secrets has a lot of bad things to say about Anthony Levandowski.
It accuses him of stealing 14,000 confidential files about Waymo’s self-driving technology, including detailed designs of proprietary circuit boards and the laser ranging LiDAR systems, when he was employed there.
After covering his tracks, the lawsuit alleges, Levandowski pocketed a multimillion-dollar payout from Google and, using the secrets he had just stolen, promptly set up a new company, Otto, which was acquired shortly after by Uber for around $680m.
On Friday 24th February, Uber issued a blanket denial, saying in a statement: “We have reviewed Waymo’s claims and determined them to be a baseless attempt to slow down a competitor and we look forward to vigorously defending against them in court.” Levandowski did not respond to a request for comment.
But if Google is able to prove its case, the cost to Uber could be significant. In addition to monetary damages, Waymo is seeking an injunction against Uber to bar it from using the allegedly stolen tech.
Google could win a “head-start” injunction against Uber, preventing the company from working on the disputed LiDAR technology for as long as it took Google to develop, according to Robert Merges, an intellectual property expert at the University of California, Berkeley law school. For Uber to “sit on the sideline” for three to five years while its competitors race to market would be a “very significant setback”, Merges said.
Indeed, according to Uber’s own CEO, Travis Kalanick, such a delay could be fatal.
In August, Kalanick laid out the stakes of his competition with Google to Bloomberg: “The minute it was clear to us that our friends in Mountain View were going to be getting in the ride-sharing space, we needed to make sure there is an alternative [self-driving car], because if there is not, we’re not going to have any business.”
Building their own self-driving car “is basically existential for us”, he added.
At the center of the current dispute is LiDAR, the system of lasers that allow an autonomous vehicle to build a 3D map of its environment and “see” where it is going. Waymo claims that its proprietary LiDAR is its secret sauce, but Merges cautioned that “it might not be as innovative as they make it seem”.
If Waymo’s design is derived from public information, such as scientific papers, then Otto and Uber could defend the alleged similarities in design.
Still, experts questioned the speed at which Otto claimed to have developed its own system. “It takes years to break into commercialisation if you start with a blank sheet of paper,” said Richard Wallace of the Center for Automotive Research. “Recreating is a lot slower than ‘I already have it.’”
Wallace and others suggested that in the worst case scenario, an injunction, Uber could simply purchase LiDAR from another company, but it’s not the kind of technology that can be simply bought off the shelf.
According to Laszlo Kishonti, the CEO of Almotive, a driverless car company, the only LiDAR systems available for sale (at about $80,000 a pop) have long wait lists. Waiting is a risk, Kishonti said, because once a LiDAR equipped car is on the road, a company can start building a precise 3D map of a city or neighborhood, cornering the local market.
“If someone else gets there first,” Kishonti said, “they can steal whole cities and all the revenue.”
Waymo has also alleged that the theft went beyond the LiDAR system’s specifications to include other trade secrets involving the company’s supply chain and vendors. And despite Levandowski’s claim that the company was started “traditionally in a house in Palo Alto”, the company’s roots clearly point to Mountain View.
The four co-founders, Levandowski, Lior Ron, Claire Delaunay, and Don Burnette, all left jobs at Google to start Otto. An additional 28 Otto employees are Google alumni, according to a review of LinkedIn profiles, and 18 of them left jobs with Google’s self-driving car unit and joined Otto a month or two later.
Many moved into positions with the same or comparable job titles, including Sameer Kshirsagar, Google’s former manager for global supply management for self-driving cars who became Uber and Otto’s director of supply chain in July 2016, the same month he left Google.
In the lawsuit, Waymo alleges that a “supply chain manager” downloaded “confidential supply chain information and other confidential manufacturing information” one month before resigning in July 2016 and going to work for Otto. Kshirsagar did not immediately respond to a request for comment.
The suit comes as Uber is being buffeted on multiple fronts. The company has long appeared to enjoy its battles with state and local regulators and the taxi-industry, but the company is now facing enemies closer to home.
For years, the company dominated the ride-hail market despite widely discussed concerns about ethics. Customers seemed content to ignore any moral qualms about Uber’s treatment of its drivers in favor of the service’s convenience.
But the election of Donald Trump has changed the political climate in the US. More than 200,000 customers reportedly deleted their accounts in February after a questionable tweet from Uber during a New York airport taxi strike over the president’s travel ban and Kalanick’s role on an economic advisory panel for Trump produced a maelstrom of #DeleteUber outrage.
Recent publication of allegations of a workplace culture rife with sexual harassment and gender discrimination by a former Uber engineer have intensified the crisis.
While Uber has pledged to investigate and reform, a steady flow of leaks about company meetings and other airings of dirty laundry suggest that some employees are feeling significantly less loyal to their employer.
The negative portrayal of Uber’s workplace could hamper its ability to attract and retain top talent, and the fact that Uber has crafted a special message to account deleters about the harassment allegations suggests that customers continue to flee.
Recently, just hours before the Waymo suit dropped, Uber was also hit with a public rebuke from two of its earliest investors, Mitch and Freada Kapor.
The pair lambasted “a culture plagued by disrespect, exclusionary cliques, lack of diversity, and tolerance for bullying and harassment of every form” and pointed out Uber’s habit of “responding to public exposure of bad behavior by holding an all-hands meeting, apologising and vowing to change, only to quickly return to aggressive business as usual”.
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