Uber ATG is in a pickle.
Recently, an independent software reviewer found that ATG is using trade secrets taken from Waymo. In response, Uber has claimed that it "will likely" need to either license the technology or build the necessary software from scratch. Both options could incur huge costs.
Earlier this year, Uber actually spun out ATG so that Toyota, SoftBank, and Denso could invest a $1 billion round for development. Now, that same organization is facing problems.
In the IP dispute, Waymo holds the power right now. It can decide if it wants to offer a licensing fee, or it can just tell Uber to build that software from scratch. If the case is this straightforward, the latter option is the most likely, as it is the most punishing to Uber. Uber may be able to shell out cash for a licensing fee, but it cannot buy lost time. Both development time and testing time have proven to be major requirements in the AV space. Would there still be customers looking for an AV stack by the time ATG's revised product reaches completion?
While these events do not bode well for Uber, it is important to be aware that they do not guarantee failure yet. Here are possible outcomes where Uber retains its place in the AV development market. These are far from guaranteed, but it is possible that:
- The function of the trade secret can be recreated in an amount of time that is detrimental, but not wholly disastrous, for Uber
- Other independent software evaluators find that Uber is not misappropriating Waymo IP
Until the above events are resolved, we can't know precisely how detrimental this will be for Uber ATG. However, it does put the company at a higher risk among its competition who continues to announce new partnerships (VW partnering with Argo, Hyundai partnering with Aptiv). Those monitoring the competition among AV developers should assign a higher risk to Uber ATG and then alter their risk assessment based on the fallout of these events.
And as a final dig from Waymo, the company is slowly increasing the pressure in a new way: it’s the first AV developer to test truly driverless vehicles with the public.
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