Alphabet overtakes Uber in race to self-driving
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Alphabet overtakes Uber in race to self-driving

Alphabet was one of the first companies to take the self-driving car business seriously, but somewhere along the way, it looked like it had lost its leadership position. Last year, all that changed – the company spun off its automated driving business into Waymo (which has just started trialing a self-driving taxi business), and Waymo has sued startup Uber, a serious rival in the sector. Just like that, it seems, Alphabet is back in pole position.

Alphabet’s share price has risen by 25%, year-to-date

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SOURCE: Yahoo Finance

Waymo has been quietly strengthening its engineering credentials, pursuing several engineers from Terra Bella (formerly the satellite division of Google), and designing new hardware to enable its vehicles better visibility. It’s also added another future manufacturing deal (this time with Honda) and announced a partnership with Uber-competitor Lyft Inc.

Meanwhile, Uber’s leadership has been torn asunder by a high profile culture crisis that includes claims of “pervasive sexual harassment” throughout the company. Numerous executives and engineers have fled the company, and former U.S. Attorney General Eric Holder is expected to issue an internal report to Uber about sexual harassment claims this week.

Waymo’s court case against Uber accuses it of stealing trade secrets by acquiring an autonomous driving startup headed by Anthony Levandowski. Levandowski previously helped run Google’s self-driving segment, and Waymo contends that he stole “thousands” of documents. This has added to Uber’s misfortune, forcing it to fire Levandowski and, thereby, separating it from key talent that had been driving the business. According to Silicon Valley intellectual property lawyer Jim Pooley (who has no personal involvement in the case):

“The same way Waymo improved its position by getting Uber to cut Levandowski, Uber improved its position by distancing themselves from him. This is all about risk reduction.”

Whether Uber’s “distancing” pans out as planned remains to be seen – freed from being beholden to Uber, Levandowski’s case could move to criminal court, giving him the potential to cut a deal with prosecutors in exchange for immunity. If Uber is to be believed when it claims to have no connection to stolen documents, this won’t worry them at all. But in any eventuality, it has helped Alphabet to reposition itself in the autonomous driving industry at the expense of a formerly troublesome rival.

Disclosure

Dominion holds Alphabet in its Global Trends Managed Fund. 


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