UPDATED 13:49 EDT / FEBRUARY 09 2018

EMERGING TECH

Uber and Waymo trade theft battle ends in surprise $245M settlement

The long-awaited trial between Uber Technologies Inc. and Alphabet Inc. came to an abrupt end after just four days, as Uber has agreed today to pay a settlement of $245 million in equity for allegedly stealing trade secrets from Alphabet’s self-driving car company, Waymo.

The settlement is significantly less than the $1.86 billion Alphabet originally wanted, but it still marks a major victory for the company. The equity in Uber, in which Alphabet already has a stake, would amount to 0.34 percent of Uber’s private market value.

Waymo’s fight with Uber began in February 2017, when the company learned that Uber’s self-driving car project used “highly specialized” LiDAR technology that was identical to its own. Uber’s project had recently grown with its $680 million acquisition Otto, a self-driving truck startup founded by former Google engineer Anthony Levandowski.

Waymo said that after an initial investigation, it discovered that Levandowski had downloaded more than 14,000 confidential design files, including the designs for Waymo’s LiDAR. The company said other former employees had also stolen files before leaving to join Uber or Otto in what it called “a concerted plan to steal Waymo’s trade secrets and intellectual property.”

Levandowski was the main target of Waymo’s complaints, but the company also accused Uber of not performing its due diligence when acquiring Otto. Uber defended Levandowski at first and denied all accusations against him, but it later fired him for not cooperating with the court.

Uber said in Levandowski’s termination letter that he had claimed to have “returned or destroyed” any confidential files that belonged to a previous employer. But Uber Chief Executive Dara Khosrowshahi conceded in an open letter today that the Otto acquisition “should have been handled differently.”

“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,” said Khosrowshahi. “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. ”

Khosrowshahi said Uber still does not believe that its self-driving cars use any of Waymo’s trade secrets, but he added that Uber is “taking steps with Waymo” to ensure that its technology is based on entirely its own work alone. Sources told Gizmodo that Khosrowshahi had proposed a $500 million settlement but Alphabet agreed to the lower amount in return for Uber promising not to use Waymo hardware or software.

“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,” he said. “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.”

Photo: Uber

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