Uber, Waymo and Their Billion-Dollar Showdown

The ongoing court saga between Alphabet’s Waymo and Uber concerning the alleged intellectual property theft by Uber continues to evolve. Those on the couch with popcorn have not been disappointed. The most recent revelation to spill from the court proceedings is the amount Alphabet has invested in its autonomous car research and development: $1.1 billion. Not an insignificant amount of money, but still less than two-tenths of Alphabet’s market cap.

Nonetheless, such a large amount invested at the vanguard of the evolution of self-driving vehicles is demonstrative of how important Waymo views its technology, and provides a bit more perspective to Waymo’s earnest desire to have Uber’s efforts stymied, especially given the accusation that Anthony Levandowski left Waymo and took with him its intellectual property on his way to Otto, which was subsequently purchased by Uber.

Levandowski, Waymo’s technology lead, allegedly walked out of Waymo with 14,000 documents to start a competing entity, Otto (for those of who are not familiar with California labor law, non-compete agreements do not exist in California, as they are not enforceable). Uber snapped up Otto for $680 million. The question at that time was, Did Levandowski and Uber conspire, or did Levandowski act on his own and both Uber and Waymo were victims?

While the court and Uber pressured Levandowski to produce the “files,” the judge in the case has worked to simplify the dispute so that it may be placed before a trial jury. When Levandowski declined to produce the files, he was terminated by Uber, giving creadance to the theory that perhaps there were two victims—Waymo and Uber—and they were now duking it out in court over a situation that has to feel like a large bird just dropped a gift upon their collective heads.

But Waymo isn’t buying it. The company has continually asserted that while Levandowski has envoked his Fifth Amendment right to decline to testify, this stance has had Uber’s support even while Uber was pushing him out the door. Waymo has pointed out that Uber issued Levandowski $250 million of Uber stock with a vesting date of the day after Levandowski resigned from Waymo. To the casual observer, one would think that a large portion of the $680 million paid for Otto found its way into Levandowski’s pocket, so he isn’t exactly in need of employment.

Which brings us to where we stand today. The federal judge ordered Uber to produce for Waymo a due diligence report prepared by a third party, Stroz Friedberg. Levandowski’s attorney pushed back and the judge pointedly noted in his refusal to back away: “Mr. Levandowski cannot prevent Uber and Stroz from producing the Stroz Report for consideration in this civil action solely because it ‘may incriminate him.’”

Uber noted that it was not part of the Levandowski appeal, and noted its “cooperation” in producing more than 280,000 pages of production documents and how it was prepared to produce the Stroz Friedberg report.

A careful read of the judge’s ruling indicates that one of the tasks levied on Stroz Friedberg was to determine whether Levandowski had “improperly retained confidential information from Waymo,” thus providing clarity as to the significance of the due diligence report.

The trial is scheduled to begin in October, though following receipt of the Stroz Friedberg report Waymo has asked for a delay. According to Reuters, “Waymo said the report contains critical evidence that necessitates further investigation which cannot be completed by Oct. 10.”

We’ll have to wait to watch how this case turns out, but that gives us plenty of time to pop a bit more popcorn and get a comfortable seat as the two companies get ready to battle in public the billion-dollar technology and determine whether a trusted insider broke that trust.

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May 29, 2018

Christopher Burgess

Christopher Burgess (@burgessct) is a writer, speaker and commentator on security issues. He is a former Senior Security Advisor to Cisco and served 30+ years within the CIA which awarded him the Distinguished Career Intelligence Medal upon his retirement. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century”. He also founded the non-profit: Senior Online Safety.

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