The same take-no-prisoners, world-conquering mentality that fueled Uber’s rise, from a scrappy ride-hailing service to a $68 billion tech behemoth, suddenly seems like it could be the company’s undoing. Over the past several weeks, Uber has been rocked by a series of scandals, beginning with its clumsy response to Donald Trump’s travel ban—which led some 200,000 customers to delete their accounts—and culminating in reports that it had used proprietary software to evade government regulators. In between, the company was accused of turning a blind eye to allegations of sexual harassment and fostering a chauvinistic work environment. C.E.O. Travis Kalanick, who was recently captured on video berating an Uber driver, has since acknowledged that his company’s culture needs to change, and that he needs leadership help.
Investors are confident that Uber can overcome its recent spate of bad press. But speculation is building in Silicon Valley that Uber may yet face a more existential threat: a lawsuit, filed in late February by Alphabet, that accuses Uber’s subsidiary, Otto, of stealing self-driving car technology from its own driverless car spin-off, Waymo.
It’s a familiar sort of story in the tech industry, where gifted engineers have a habit of wandering off to start their own companies. According to the lawsuit, Anthony Levandowski, a former member of Google’s self-driving car team, stole Waymo’s proprietary LiDAR (Light Detection and Ranging) sensor technology when he left in early 2016 to co-found Otto. That technology, the suit alleges, eventually found its way to Uber when Otto was suddenly acquired, just months after its launch, for an astounding $680 million. The smoking gun, according to Google, was an e-mail—intended for Uber but sent to Waymo in error—that included schematics bearing a “striking resemblance” to Waymo’s own LiDAR sensors. The e-mail confirmed Google’s suspicions that Levandowski had taken proprietary information with him, and the company filed suit a few weeks later. “We will have a chance to tell our side of the story in upcoming filings and look forward to that opportunity,” an Uber spokesperson told The Hive.
While sources in Silicon Valley say Uber’s sexist “brogrammer” culture isn’t likely to hurt the company in the long term, an injunction from Google would be something else entirely. Driverless cars are the lynchpin of Uber’s path to profitability, which has thus far remained elusive. The reasoning behind acquiring Otto, Kalanick said in an interview last year, “starts with understanding that the world is going to go self-driving and autonomous.” If Uber can’t be among the first to market with a self-driving car, he conceded, “then the future passes us by, basically, in a very expeditious and efficient way.” If Alphabet were to succeed in its suit, it’s possible that it could force Uber to scuttle its self-driving car program and start from scratch. For a company losing well over a billion dollars a year, such a setback could prove devastating.
Uber can afford to pay a hefty sum to Alphabet, according to people close to Uber. But a prolonged battle over intellectual property could drain morale and talent even before the LiDAR case reaches a conclusion. “While I think that the public’s attention span can be short, the continued number of Uber executives leaving is making the perception more of a reality for the company,” one investor told me. “Add in the reports of them losing money hand over first and they might end up being a bust, which is something I can’t believe. A couple of years ago I thought Uber had the potential to become the logistics company of the future.”
Others were more sanguine. Uber “already had made it,” one Valley insider said, when asked whether Uber would pull through, while another said Uber would be a $100 billion company when it goes public in the future. “It will remain a force,” a separate source, a prominent venture capitalist, said. “There is no going back.” Still, he conceded, the Securities and Exchange Commission could be a problem if it turns out that Uber knew about potential conflicts before acquiring Otto.
While Silicon Valley was closing ranks, Waymo was moving ahead with plans to stop Uber in its tracks, amending its lawsuit last week to ask for an injunction against Uber’s use of its self-driving technology. The case, as Google describes it, appears damning. According to a heavily redacted written declaration by Google engineer Pierre-Yves Droz—who, along with Levandowski and Andrew Schultz, founded the company that became the basis for Google’s own self-driving-car project—Levandowski was vocal about his plan to create his own company. “I distinctly remember taking a walk around our Mountain View office one-on-one with Mr. Levandowski on or around January 5, 2016,” he said.
“During this walk, he told me specifically that he wanted his new company to have a long-range LiDAR, which is very useful for self-driving truck applications he was interested in,” Droz continued. “He also told me that he planned to ‘replicate’ this Waymo technology at his new company.” This followed a conversation Droz recalled having with Levandowski, in which Levandowski said he’d met with Uber executive Brian McClendon, who was overseeing Uber’s self-driving-car project. “Later in January 2016, a colleague told me that Mr. Levandowski had been seen at Uber’s headquarters in mid January,” Droz said. “I asked Mr. Levandowski about this, and he admitted he had met with Uber, and the reason he was there was that he was looking for investors for his new company.”
If Levandowski had, in fact, been in talks with Uber as early as 2015, it would not have been out of character. Like Kalanick, Levandowski reportedly has a reputation for breaking the rules to turn his ideas into reality. He grew impatient when Google delayed putting its cars on the road, Bloomberg reports, and hired a lobbyist in Nevada to write a new law that would let companies like Google test-drive autonomous vehicles in the state. Google only found out about the lobbying efforts when the company received an invoice from his hired lobbyist, David Goldwater. Uber, too, has often found it easier to ask for forgiveness than permission. In 2014, the company was raked over the coals after one executive was revealed to have tracked a journalist’s ride using an internal God View tool, while another allegedly suggested that Uber should do opposition research on critical reporters. It didn’t help Uber’s reputation, but it didn’t stop Kalanick from going on to raise several billion dollars more in funding.
Uber is also hardly the first Silicon Valley giant to be accused of stealing technology from a competitor. Earlier this year, Facebook was ordered to pay $500 million to a gaming company called ZeniMax, when Oculus, which C.E.O. Mark Zuckerberg acquired several years earlier, was found guilty of nondisclosure agreement violation and copyright infringement. But Uber isn’t being sued by a smaller company: it’s going up against Alphabet, the world’s most valuable tech company with a market capitalization of nearly $600 billion. The financial ramifications are totally different now, too. Facebook would have survived if a court ruled that it had to shut down Oculus. Uber, if it was forced to restart its self-driving car program, might not.
Additional reporting by Nick Bilton.
