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Waymo and Uber reach a surprise settlement

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After five days of trial, the two tech giants call it quits

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Illustration by Alex Castro / The Verge

After months of buildup and nearly a full week of courtroom wrangling, the two sides in the Waymo v. Uber lawsuit have reached a settlement, and the case is being dismissed with prejudice. An attorney for Waymo announced the settlement this morning and was met with gasps of shock from reporters and members of the public who had crowded into the courtroom in San Francisco in hopes of seeing more drama. Judge Alsup granted the motion to dismiss, and with that, the case is, in his words, “ancient history.” This was supposed to be day 5 of the trial, which was expected to last at least another week, likely more.

So who gets what? Waymo gets 0.34 percent of Uber’s equity at the company’s $72 billion valuation, which works out to a value of around $245 million. Waymo had originally sought a $1 billion settlement last year before the trial got underway, but Uber rejected that deal. Both sides are responsible for paying their own legal fees. “This is all equity; zero cash,” said a source familiar with the settlement. “It means Waymo is invested in Uber’s future.”

“We have reached an agreement with Uber that we believe will protect Waymo’s intellectual property now and into the future,” Waymo says in a statement. “We are committed to working with Uber to make sure that each company develops its own technology. This includes an agreement to ensure that any Waymo confidential information is not being incorporated in Uber Advanced Technologies Group hardware and software. We have always believed competition should be fueled by innovation in the labs and on the roads and we look forward to bringing fully self-driving cars to the world.”

Uber CEO Dara Khosrowshahi released a contrite statement about the settlement where he expresses “regret” and apologizes to Uber’s employees for the distracting nature of the case. “To our employees, in particular the great and talented people of Uber’s Advanced Technologies Group: I am inspired by your passion and commitment to bringing self-driving vehicles to life,” he writes. “Over the last year, you’ve been distracted from your mission. For that I am sorry.”

Khosrowshahi also defends Uber’s acquisition of Otto, the company started by former Google employee Anthony Levandowski, and the crux of the entire lawsuit. “There is no question that self-driving technology is crucial to the future of transportation — a future in which Uber intends to play an important role. Through that lens, the acquisition of Otto made good business sense,” he writes.

He goes on to say that he “[does] not believe that any trade secrets made their way from Waymo to Uber, nor do we believe that Uber has used any of Waymo’s proprietary information in its self-driving technology.”

According to a source familiar with the matter, Uber cannot use any of Waymo’s hardware or software trade secrets as one of the conditions of the settlement. That’s interesting, especially since the trade secrets at the heart of the case were all related to hardware. Judge Alsup had instructed Waymo to bring a separate lawsuit against Uber if it wished to block the company from using its software.

“As Uber’s statement indicates, no trade secrets ever came to Uber,” said Travis Kalanick, former CEO, in an official statement. “Our sole objective was to hire the most talented scientists and engineers to help lead the company and our cities to a driverless future.” Kalanick said that the evidence “overwhelmingly proved that” and that it was “clear” that Uber was going to win.

The settlement came right before Waymo was expected to present many of the technical aspects of its argument, including how Waymo’s LIDAR hardware ended up in Uber’s products. Uber has denied utilizing any of Waymo’s trade secrets, and up until this point, Waymo had yet to connect those dots. Levandowski, who has been accused of stealing Waymo’s trade secrets and bringing them to Uber, was scheduled to take the stand on Monday, at which point he was expected to assert his Fifth Amendment rights. That probably would not have looked good for Uber, so the timing of the settlement is telling.

Still, Uber sees this as a big win, especially since it clears the deck for the company ahead of its expected public offering. A settlement avoids years of costly appeals for Uber, or if the case had swung in the ride-hail company’s favor, a retrial by Waymo. Most notably, the settlement reflects the difference between Uber’s old and new leadership. While Uber’s former CEO Travis Kalanick probably likely would have continued fighting, no matter the cost, Khosrowshahi saw the value in putting the case behind him. Khosrowshahi has said he wants to take Uber public in 2019.

In the end, the two companies end up closer together, like a married couple who almost got divorced. Google was an early investor in Uber, and now the equity settlement ensures that Waymo is invested in the ride-hail company’s future.