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Uber Ambitious: Will Uber’s Attempt to Rule the Ridesharing World Be Its Ultimate Undoing?

By: Bridget Clerkin September 20, 2017
Ridesharing giant Uber finds itself in hot legal water this fall.

Empire building is tricky business. Just ask the Romans—or anyone at Uber.

The Silicon Valley giant may still rule the rideshare game, but much like Rome’s march into unfriendly Germanic lands, its attempt to push into self-driving territory has left it vulnerable to attacks from powerful competitors—and even some from within its own ranks.

They may not be barbarians, but Uber’s challengers are likely to wage brutal battle on the legal front. And thanks to a recent decision by a judge overseeing one of several lawsuits the company is currently embroiled in, the biggest courtroom fight of all—against fellow behemoth Waymo—will be gladiatorial: a fiercely-fought conflict disputed in full view of the public.

With the legal foray looming, Uber may have attempted to forestall further trouble, recently enlisting a new leader who’s demonstrated less taste for expansionism in the past. But the weight of its previous ambitions is already bearing down on the besieged business.

Will its rideshare kingdom ultimately crumble—or can Uber live to fight another day?

Silicon Valley Showdown

The origins of Uber’s biggest legal challenge can be traced back to last summer, when the company first tested the waters of autonomous tech.

Then-CEO Travis Kalanick made the executive decision to dive head-first into the pursuit, spending $700 million to acquire the startup Otto, a self-driving truck venture comprised of ex-Google employees who had worked on driverless technology for the search engine giant. At its helm was Anthony Levandowski, a former engineer for Google’s self-driving spinoff Waymo, who was subsequently put in charge of Uber’s autonomous research.

Levandowski
Anthony Levandowski was fired from Uber in May for failing to cooperate with court proceedings.

Together they made a mighty team, coupling Uber’s reach and accessibility with Otto’s self-driving prowess. For a while, it even seemed Uber had leapfrogged the competition to take the lead in the self-driving race.

That is, until they heard from Waymo’s lawyers.

The short turnaround time between Otto’s January creation and its August purchase by Uber was suspicious to Waymo’s legal counsel, and the company accused Levandowski of creating Otto as a front to steal its trade secrets—and pass them along to Uber. All told, Waymo lawyers allege Levandowski took more than 14,000 confidential files with him when he left.

And a report they’ve demanded from Uber for months—and won the right to see through a decision made last week—may prove it.

Uber officials commissioned the document in question when the company was considering the Otto acquisition early last year. Waymo attorneys argued that it could be a smoking gun, possibly containing references to classified information in the allegedly stolen files.

(For his part, Levandowski appealed the decision, arguing that his Fifth Amendment rights protected him from submitting potentially self-incriminating evidence. He lost—and was fired from Uber in May for not cooperating in the suit.)

And it’s far from the only aspect of the case that hasn’t broken Uber’s way.

Earlier this month, the company also lost a bid to sidestep the trial all together and settle the matter through arbitration. Instead, it will be forced to do public battle against Waymo starting this October, in the United States District Court in San Francisco.

Once they get there, Waymo’s lawyers will also be able to inform the jury that Uber has misled the court in the past, due to the app company’s habit of withholding evidence and missing deadlines related to the case.

But even as it gears up to battle its cross-town rivals, Uber must also deal with internal legal challenges brought by its own investors.

Et Tu, Benchmark?

TravisKalanick
Uber board member and former CEO Travis Kalanick is embroiled in a legal war with Benchmark Capital, an investor in the rideshare company.

It seems the San Francisco District Court isn’t the only one Uber has kept information from.

Early investor—and major Uber shareholder—Benchmark, a venture capital firm, sued Kalanick for fraud last month, alleging he failed to disclose information to the company’s board ahead of several crucial votes.

At the crux of the conflict lies the claim that Kalanick withheld certain data from the board to manipulate the group, in order to create—and then fill—an additional three seats on the body. After resigning as CEO in June, bowing to pressure from investors concerned with the parade of scandals that had befallen the company, Kalanick himself was named to one of the openings. (It’s been widely speculated that Kalanick stacked the board with friends in an attempt to reclaim his old position.)

Benchmark wants the three members removed, Kalanick included, claiming it wouldn’t have approved the board expansion nor the appointees if it were privy to information on the widespread sexual harassment allegations the company was facing, or news on its looming legal duel with Waymo, among other unsavory facts.

In the battle over the fate of the $70 billion company’s leadership, Benchmark owns 13% of Uber, while Kalanick controls just 10%.

Still, in a rare reprieve for the embattled ex-boss, a judge recently declared the case could be settled through arbitration.

It’s a small victory for Kalanick, but the company at large is still at war. If it can survive a settlement with Benchmark, however, and take down Waymo in a courtroom brawl, the empire may still be able to strike back.


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