Waymo attorney Charles Verhoeven on Friday announced the self-driving car company had settled its lawsuit against Uber over its alleged use of stolen trade secrets, bringing a sudden end to a year-long legal battle.
Google’s parent company Alphabet, which owns Waymo, will receive a larger stake in Uber under the terms of the settlement, sources familiar with the agreement told Gizmodo. Alphabet will receive 0.34 percent of Uber equity, valued at about $245 million. (For comparison, Uber offered nearly $600 million in equity to acquire Otto, the self-driving truck startup that allegedly swept Waymo’s secrets into Uber.)
Waymo has also agreed not to pursue its remaining trade secret claims against Uber. The company had a list of more than 100 claimed trade secrets, eight of which were at issue in this trial.
Earlier this week, Uber put an offer on the table for about $500 million in equity, sources familiar with the negotiations said. Settlement negotiations had been underway for several months, and as the trial kicked off Monday, Uber CEO Dara Khosrowshahi proposed the $500 million settlement to Uber’s board. However, some board members pushed for an even lower amount—a signal of confidence in Uber’s case, given that Waymo had demanded $1 billion and an apology during earlier negotiations.
However, Waymo held out for promises from Uber not to use its hardware or software and ultimately agreed to the lower dollar amount in exchange for those provisions. An independent auditor will review Uber’s code to ensure it doesn’t infringe on Waymo’s technology.
Uber has plans to go public next year and Google is already a major investor, so setting the trial aside now might get Google to a quicker payday once Uber has its initial public offering. Even if the jury in this case had reached a verdict, the case was expected to drag on into appeals—and potentially new trials, as Waymo continued down its list of secrets.
“We have reached an agreement with Uber that we believe will protect Waymo’s intellectual property now and into the future. We are committed to working with Uber to make sure that each company develops its own technology,” a Waymo spokesperson said in a statement. “This includes an agreement to ensure that any Waymo confidential information is not being incorporated in Uber Advanced Technologies Group hardware and software. We have always believed competition should be fueled by innovation in the labs and on the roads and we look forward to bringing fully self-driving cars to the world.”
Waymo had presented most of its case in a federal court in San Francisco this week, although it had yet to delve into the details of its allegedly stolen trade secrets. It had scheduled witnesses today from both companies to talk about the details of its technology—but those witnesses never made it to the stand.
Last fall, Uber redesigned its lidar system, Fuji, and part of the settlement includes provisions for Waymo to ensure its technology isn’t being used.
Uber has maintained since the lawsuit was filed that none of Waymo’s trade secrets ever made it onto Uber servers and that it wasn’t using Waymo’s tech.
But Uber’s negotiations to acquire Otto were yet another scandal for the company’s new CEO, Dara Khosrowshahi, to clean up. Uber’s former CEO Travis Kalanick held regular meetings with the Otto team before the company was officially formed, and Uber’s due diligence investigation into Otto seemed designed to whitewash the deal.
“Our sole objective was to hire the most talented scientists and engineers to help lead the company and our cities to a driverless future,” Kalanick said in a statement. “The evidence at trial overwhelmingly proved that, and had the trial proceeded to its conclusion, it is clear Uber would have prevailed. I remain proud of the critically important contributions Uber ATG has made to the company’s future, and I look forward to their inspired efforts becoming a reality on the roads in cities around the world.”
Forensic investigators found confidential Waymo files on devices belonging to Otto co-founder Anthony Levandowski, a former Waymo employee, but Kalanick pushed the deal forward anyway. Bill Gurley, an investor and former member of Uber’s board, testified in court this week that Kalanick led him to believe the due diligence report hadn’t turned up anything alarming—when in fact, Levandowski had discussed shredding hard drives of Waymo information and even deleted files off his computer during an interview with the due diligence investigators. (Waymo is still pursuing a confidential arbitration case against Levandowski for using internal data to poach Waymo employees.)
Below is the letter Khosrowshahi released following the settlement:
My job as Uber’s CEO is to set the course for the future of the company: innovating and growing responsibly, as well as acknowledging and correcting mistakes of the past. In doing so, I want to express regret for the actions that have caused me to write this letter.
To our friends at Alphabet: we are partners, you are an important investor in Uber, and we share a deep belief in the power of technology to change people’s lives for the better. Of course, we are also competitors. And while we won’t agree on everything going forward, we agree that Uber’s acquisition of Otto could and should have been handled differently.
To our employees, in particular the great and talented people of Uber’s Advanced Technologies Group: I am inspired by your passion and commitment to bringing self-driving vehicles to life. Over the last year, you’ve been distracted from your mission. For that I am sorry.
There is no question that self-driving technology is crucial to the future of transportation—a future in which Uber intends to play an important role. Through that lens, the acquisition of Otto made good business sense.
But the prospect that a couple of Waymo employees may have inappropriately solicited others to join Otto, and that they may have potentially left with Google files in their possession, in retrospect, raised some hard questions.
To be clear, while we do not believe that any trade secrets made their way from Waymo to Uber, nor do we believe that Uber has used any of Waymo’s proprietary information in its self-driving technology, we are taking steps with Waymo to ensure our Lidar and software represents just our good work.
While I cannot erase the past, I can commit, on behalf of every Uber employee, that we will learn from it, and it will inform our actions going forward. I’ve told Alphabet that the incredible people at Uber ATG are focused on ensuring that our development represents the very best of Uber’s innovation and experience in self-driving technology.
As we change the way we operate and put integrity at the core of every decision we make, we look forward to the great race to build the future. We believe that race should be fair—and one whose ultimate winners are people, cities and our environment.