The gloves are coming off in the Silicon Valley race to dominate the self-driving world.
Google’s Waymo is now suing Uber and its recent acquisition, Otto, for stealing technology secrets.
As Business Insider’s Alexei Oreskovic and Danielle Muoio reported on Thursday:
At the center of the suit is Anthony Levandowski, one of the original members of the team that worked on Google’s self-driving-car project. In January 2016, Levandowski left Google after nine years to found Otto, a startup focused on autonomous trucks. Six months later, Uber acquired Otto in a deal valued at $US680 million. Waymo alleges that Levandowski “downloaded over 14,000 highly confidential and proprietary design files for Waymo’s various hardware systems, including designs of Waymo’s LiDAR and circuit board” six weeks before resigning from Google.
This lawsuit follows one filed by Tesla for similar reasons. Tesla recently sued the former head of the Google Car project, Chris Urmson, and Sterling Anderson, who ran Tesla’s Autopilot program from 2015-2016, for stealing the electric automaker’s intellectual property in pursuit of a new venture, Aurora Innovation.
In the lawsuit, there was this interesting language:
The Autopilot features that are built into every Tesla vehicle, and continually updated through free over-the-air updates, are widely regarded as the most advanced, safest, and most reliable technology in the autonomous area. In their zeal to play catch-up, traditional automakers have created a get-rich-quick environment. Small teams of programmers with little more than demoware have been bought for as much as a billion dollars. Cruise Automation, a 40-person firm, was 12 purchased by General Motors in July 2016 for nearly $US1 billion. In August 2016, Uber acquired Otto, another self-driving startup that had been founded only seven months earlier, in a deal worth more than $US680 million.
Anderson and his business partners … decided to take a run at a similar fortune.
Compared with the ascent of the electric car roughly a decade ago, the stakes seem much higher for autonomous technology. There were some legal skirmishes back then, particularly when it came to Tesla’s now-CEO Elon Musk and one of the company’s founders, Martin Eberhard.
But most of the electric-car startups from back then either folded or went bankrupt, leaving more-or-less Tesla alone in the space. The big automakers created some EVs, such as Nissan’s Leaf, but their sales have been disappointing. In fact, to stoke the market, Tesla open-sourced its EV patents in 2014.
Tesla’s battery and drivetrain technologies are distinctive (thousands of lithium-ion cells wired together, a rather more monolithic design), but electric vehicles are hardly a huge innovation — they have been around in one form or another for a century.
Self-driving tech is a different story, and no one is interested in sharing.
Building a perfect bubble
Taken together, the Waymo and Tesla lawsuits strongly indicate that there’s a self-driving bubble developing in Silicon Valley. With less than a year of work, some engineers can sell out for hundreds of millions or a cool billion.
That’s the going rate for self-driving tech that works, according to Ford’s Chief Technical Officer Raj Nair. Ford just took a majority stake, to the tune of $US1 billion, in Argo AI, a machine learning startup, to advance its own ambitious self-driving efforts, and the company says that $US1 billion is about what it costs to develop so-called “level 4” autonomy, which is one stage shy of the vehicle completely driving itself, with no human input.
Entrepreneurs can smell money and quick, lucrative exits. The traditional carmakers are flush with cash after several years of booming US sales, and they don’t want to get left behind in the race to bring self-driving cars to market. (They were far more low-key when it came to electric cars, effectively letting Tesla assume all the early risk.)
And a new arrival like Uber is riding high on its nosebleed valuation, more than $US60 billion. Not moving into self-driving tech now would be catastrophic if the market shifts hard in that direction over the next decade and ride-hailing services are saddled with a massive commitment to high-cost human drivers — or have to pay up to licence autonomous technologies, which is an integral part of Ford’s business plan.
In other words, fear has broken out. That, rather than a meaningful market for self-driving vehicles, is swelling the bubble. Now that the lawyers have entered the picture, that bubble could be close to popping.
As autonomous vehicles have ascended and surpassed electric cars as the futuristic preoccupation of choice in the tech industry, I’ve experienced the ominous feeling that I’ve seen this movie before. While there are impressive self-driving experiments being conducted all across the USA, the technology is far from being commercialized.
The ambition is present, but it was also there when we saw numerous electric-car startups rise and fall after the financial crisis. As it turned out, while people wanted Teslas, they didn’t want electric cars — sales today only amount to about 1% of the global market.
The frenzy to get bought and get bought in a hurry signals that self-driving cars could fall victim to a similar dynamic. If we see more high-profile lawsuits, I’m going to get even more worried.
Get the latest Google stock price here.
NOW WATCH: We took a ride in Uber’s new self-driving car on the streets of San Francisco — here’s what it was like
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.