Tue, Mar 07, 2017 - Page 11 News List

Alphabet’s Uber suit is end of uneasy marriage

SHOWDOWN:Alphabet alleges that Anthony Levandowski downloaded 14,000 design documents and used them to create Uber’s key autonomous vehicle technology, Lidar

Reuters, SAN FRANCISCO

Uber Technologies Inc chief executive Travis Kalanick speaks to students at the Indian Institute of Technology campus in Mumbai, India, on Jan. 19 last year.

Photo: Reuters

When Uber Technologies Inc was raising venture capital in 2013, it was one of the hottest deals around — and no one was more eager to write a check than Bill Maris and David Krane of Google’s venture capital arm.

Not everyone at Google Ventures, since renamed GV, agreed.

The firm already had an investment in a competitor, Sidecar, and Uber was demanding what then looked like a sky-high valuation.

Maris and Krane prevailed and the deal is now regarded as GV’s greatest success. On paper, the firm’s initial 2013 investment of US$258 million gained about 14 times its value over the next three years to more than US$3.5 billion.

However, now Alphabet Inc, Google’s corporate parent, is suing Uber for theft of trade secrets, alleging that one of the top engineers in its self-driving car program decamped with thousands of confidential files, including designs that helped him start self-driving truck company Otto and then quickly sell it to Uber.

Uber denies the claims.

The lawsuit, filed by Alphabet’s self-driving car unit Waymo, has jolted the fast-growing and highly competitive industry that has sprung up around autonomous vehicles and ride services, which are seen as the future of private road transport.

Yet the confrontation was a long time in the making — the complex relationship between the companies was tense from the start, according to people familiar with the situation, and soured further as they increasingly competed with each other.

Now, if the Waymo suit damages Uber, GV’s investment in the ride-hailing company stands to go down as a Silicon Valley rarity — a large funding deal undermined by the firm’s own investors.

“Whatever Waymo gains, Google Ventures loses,” Santa Clara University associate professor of law Stephen Diamond said.

The lawsuit is just one in a series of public setbacks for Uber, including allegations of sexual harassment that prompted an internal investigation, a video of chief executive Travis Kalanick arguing with an Uber driver that led him to make a public apology and Uber’s admission on Friday last week that it used a secret tracking tool to avoid the authorities.

“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,” Uber said in a statement in response to the lawsuit. “In the meantime, we will continue our hard work to bring self-driving benefits to the world.”

A spokeswoman for GV declined to comment.

Uber was more than just another investment for then-fledgling Google Ventures, which needed a high-profile deal to put it on the map.

Maris and Krane were early Uber fans, but it took about two years for the pair to connect with Kalanick. When Uber investor Benchmark finally brokered a meeting in May 2013, the GV partners were determined to do a deal at virtually any cost, according to two sources close to the transaction.

With other would-be investors waiting in adjacent conference rooms at Uber’s San Francisco offices, Maris and Krane made their pitch to invest.

Kalanick pushed for a higher valuation, without a board seat — GV pushed back, asking for a board observer seat and a liquidation preference for protection if Uber was sold at a loss, one of the sources said.

They finally came to terms, with a US$3.5 billion valuation, and there were signs that a broader alliance could be in the offing.

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