Uber apologises as company settles Waymo trade secrets lawsuit

New chief executive agrees to pay $245m to settle case brought by Google subsidiary

Uber chief executive Dara Khosrowshahi has apologised and agreed to pay $245 million to settle a trade secrets case brought by Google subsidiary Waymo, in the latest effort by new management to clean up the group's tarnished image.

The transport company will pay the settlement in its shares to Waymo, the self-driving car unit of Google’s parent Alphabet, as it pledged not to use its rival’s hardware and software designs in its own autonomous vehicles.

The move is the latest in a series of steps taken by Mr Khosrowshahi to fix Uber's reputation for using aggressive and unscrupulous tactics since his appointment last August, and to distance the company from the actions of its founder and former chief executive Travis Kalanick.

The amount is significantly less than what Waymo and Uber had discussed earlier in the week when the two sides neared a $500 million settlement, but that figure was not approved by the car-booking company’s board, said people close to the discussions.

The two companies agreed to the reduced settlement after several days of testimony, which included subdued evidence from Mr Kalanick, who is normally known for his fiery delivery but appeared calm and dodged many of Waymo’s toughest questions.

The settlement will also allow Uber to avoid the legal costs of a long appeals process that would likely have followed any jury decision.

Humble tone

Mr Khosrowshahi struck a humble tone in a statement, expressing “regret” for the way Uber had handled its 2016 acquisition of Otto, a self-driving start-up founded by a former Waymo engineer that was at the heart of the case.

“We agree that Uber’s acquisition of Otto could and should have been handled differently,” he wrote.

“As we change the way we operate and put integrity at the core of every decision we make, we look forward to the great race to build the future. We believe that race should be fair - and one whose ultimate winners are people, cities and our environment.”

The settlement came on the fifth day of the trial, after Waymo had a chance to make its case and was set to conclude its portion of the arguments.

During the first four days of deliberations, Waymo had highlighted its intense competition in self-driving cars with Uber, and portrayed Mr Kalanick as conspiring with Anthony Levandowski, the former Waymo engineer who founded Otto and then quickly sold it to Uber.

Evidence presented in court showed that Mr Levandowski downloaded thousands of Waymo files before leaving the company, and that Uber did not properly investigate the questions around intellectual property that arose during its due diligence investigation ahead of the acquisition.

Mr Kalanick said in a statement that, in making the acquisition of Otto, “Our sole objective was to hire the most talented scientists and engineers to help lead the company and our cities to a driverless future.” He added: “As Uber’s statement indicates, no trade secrets ever came to Uber.”

Friday’s settlement will not affect other legal cases related to those events. These include a criminal investigation and a case that Waymo brought against Mr Levandowski for employee misconduct that is in arbitration.

Litigation costs

Mounting legal fees have become a problem for Uber, which reported $1.5bn in losses during the third quarter last year, largely because of litigation costs. The company is working to reduce its legal bills under general counsel Tony West, who joined Uber last year, but still faces more than 700 lawsuits worldwide.

For Alphabet, which owns Waymo, the deal will increase the size of its stake in Uber, even while the two companies continue to compete over autonomous vehicles. Alphabet was an early investor in Uber in 2013, although last year it also invested in Uber’s competitor Lyft.

Waymo welcomed the deal, saying in a statement that it believed the settlement would “protect Waymo’s intellectual property now and into the future”.

The company added: “We are committed to working with Uber to make sure that each company develops its own technology.”

Copyright The Financial Times Limited 2018