Is Google’s Lawsuit the Beginning of the End for Uber?
Uber is a company many love to hate. In many ways, it has become a toxic relationship: Can’t live it; can’t live without it. As younger citizens delay obtaining a driver’s license – if they bother to do so at all – Uber and its competitors have become the commuting method of choice. And many drivers have come to rely on Uber as a supplement to their wages, or even as their only source of income. That tension between Uber and its drivers reared its ugly head again last month, when Bloomberg posted a video that sums up the on-demand ride service’s reputation. The company’s CEO, Travis Kalanick, is shown in a dashboard video berating one of the company's drivers after an awkward conversation turned confrontational when the six-year Uber veteran accused Kalanick and the company of dropping high-end Uber Black prices. Shortly after the video was made public, Kalanick apologized to his employees in an email, which was posted publicly soon after. The CEO admitted his behavior was immature, and promised to “grow up” and seek help with his leadership skills. But he may be running short on options. Many within Uber’s executive leadership have resigned in the past few months, including its president and chief marketing officer last week, news outlets including the Washington Post reported. In February, a senior vice president of engineering was asked to leave the firm after it was revealed he did not disclose a sexual harassment complaint filed against him at his previous employer, Google. This came after another Uber employee's sexual harassment complaints went public. And it is on the engineering front where Uber confronts what several analysts called an “existential threat” to the company’s existence. Last month Alphabet Inc., the parent company of Google, filed a lawsuit against Uber in a Northern California federal court. Alphabet said a former employee stole trade secrets related to self-driving car technology, giving Uber an unfair competitive advantage by several means including patent infringement. Could this lawsuit -- centered around allegations that a former engineering employee stole secrets, scrubbed a laptop to hide any evidence, and then sold his company to Uber for $680 million -- become the ridesharing service’s death knell? At first glance, such predictions come across as hyperbolic. After all, Uber has a long history of behaving badly, according to its critics; but in the end the the San Francisco-based company was only showered with more funding from Silicon Valley and Wall Street investors. The company’s current valuation hovers around $70 billion, reports The Economist. But at the same time, the same Economist article noted that Uber’s American market share is slipping, as competitors such as Lyft capitalized on the company’s recent public-relations fiascos. Uber’s stratospheric valuation is due largely to its bullish prospects worldwide. But the company finds fierce competition and headwinds almost everywhere, from Didi in China to Gett in Israel. Meanwhile, Lyft limited its reach to within the U.S., but recent launches in dozens of smaller cities and towns across the Midwest and Northeast shows that Uber’s largest competitor is hardly going away. Nevertheless, the strategic hiccups that Uber now faces pale in comparison to what Kalanick insists is the locus of the company’s survival: self-driving cars. In an interview last year, he told Business Insider that without capitalizing on autonomous vehicles, “The future passes us by.” Kalanick also admitted that around the time Uber acquired Otto, the startup that is the foundation of Google’s lawsuit, the company was playing “catch-up” in this market. But the company envisioned a future where driverless cars, not oft-disgruntled drivers, pick up passengers and take them to work or to the club. The same goes for its competitors. Lyft, for example, partnered with GM last year as both companies seek to ensure they are not left behind in the future of mobility. Ford and Google inked a similar arrangement. Uber appears to seek supremacy, or at least its fair share of this market potential, on its own. If Uber can even get there. The company has long had a reputation playing by its own rules, resulting in bans from cities including Austin,Texas, and protests in other markets such as Portland, Oregon. Despite being told to hold off its testing of self-driving cars in San Francisco until it secured the proper permits, Uber proceeded anyway, until California’s motor vehicles department revoked those automobiles’ registrations. Meanwhile, the evidence suggests that Uber had its own struggles with its autonomous test fleet. Data from test runs in three cities revealed that humans had to take over the cars' systems about once every mile (more precisely, once every 0.80 mile), the blog Recode reported. Hence Uber’s nine-figure bet on Otto, which is now mired in litigation that seems fit for a future Hollywood movie. Companies are sued by other companies for patent infringement all the time. But as Maya Kosoff of Vanity Fair reported, many disputes are between a large and small firm. The result is more of an annoyance than a threat to the larger party, as discussed by Todd Hixon of Forbes. The problem for Uber is that it is being taken on by an even larger Goliath, Google. And if Google wins, whether in court or with a settlement, the result would make Uber more of a risky prospect to investors. Add the company’s loss of leadership, lack of direction, poor brand reputation and constant state of chaos, and Uber faces an uncertain future even it still appears to be on top of the world. Image credit: Adam Fagan/Flickr Published earlier today on Triple Pundit.