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Microsoft teams up with Cruise on self-driving cars, chips in for $2 billion investment

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The GM subsidiary is now said to be worth $30 billion

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GM Robot Car Company Cruise Photo by Andrej Sokolow/picture alliance via Getty Images

Microsoft is joining forces with Cruise, the self-driving subsidiary of General Motors, to help speed up the commercialization of autonomous vehicles. The software giant is also chipping in on a new equity investment of $2 billion for Cruise, along with previous investors Honda and GM, bringing the AV company’s valuation up to a whopping $30 billion.

Microsoft and Cruise are entering “a long-term strategic relationship” — though the partnership won’t be exclusive. It is one of Microsoft’s first partnerships with an autonomous vehicle company. (The company also struck a deal with UK-based startup Wayve last October.) As part of the deal, Cruise will use Azure, Microsoft’s cloud computing platform, to help speed up the process of making money off its fleet of autonomous vehicles. For its part, Microsoft will leverage its relationship with Cruise to expand more into the transportation sector.

“Advances in digital technology are redefining every aspect of our work and life, including how we move people and goods,” said Microsoft CEO Satya Nadella said in a statement. “As Cruise and GM’s preferred cloud, we will apply the power of Azure to help them scale and make autonomous transportation mainstream.”

Cruise has demonstrated an impressive knack for fundraising over the last few years, despite being seen as lagging behind its main rival Waymo in terms of technical achievements. In 2018, Cruise secured a $2.25 billion investment from the SoftBank Vision Fund. Later that year, GM teamed up with Honda to design a purpose-built self-driving car. The Japanese automaker said it would devote $2 billion to the effort over 12 years, including a $750 million equity investment in Cruise. In 2019, Cruise secured a $1.15 billion investment from GM, SoftBank, Honda, and T. Rowe Price Group. That last investment valued Cruise at $19 billion.

Meanwhile, Waymo has only participated in one external fundraising round of $3 billion. But the Alphabet company has arguably made more strides in terms of commercializing its technology. Last October, Waymo announced it would begin offering rides to paid customers in its fully driverless vehicles without safety drivers in Phoenix, Arizona.

Cruise recently began testing its fully driverless vehicles in San Francisco for the first time. But the company doesn’t allow non-employees to ride in its vehicles. The company had planned to launch a commercial taxi service in 2019 but failed to do so, and it has yet to publicly commit to a new date.

Last year, Cruise unveiled the Cruise Origin, a fully driverless prototype vehicle without a steering wheel, pedals, or any controls typically associated with human driving. The vehicle, which will go into production at GM’s Detroit-Hamtramck plant, is built to be shared by multiple passengers — though it remains to be seen how much appetite there is for shared vehicles in a post-COVID world. Cruise recently unveiled a new set of safety protocols intended to keep people socially distant during trips and the vehicle sanitized between fares.

Microsoft has been mostly absent from the race to develop autonomous vehicles among the world’s big tech companies. But the software giant is still poised to profit from the technology, especially when it relates to vehicle-to-vehicle communication. Today, connected car networks ingest a deluge of digital information, including advanced driver-assist features like automatic braking, adaptive cruise control, and lane-keep assist. Soon enough, that information will be the backbone of autonomy.

Microsoft has been working quietly behind the scenes to build a connected vehicle platform on top of its Azure cloud system. Renault Nissan became the first to commit to it in January 2017. Volkswagen signed on in October 2018.

This represents a shift for General Motors as well. Since 2011, GM had been using Google’s email and app suite for its 100,000 employees. But now GM, which is the largest automaker in North America, will work with Microsoft for its cloud computing needs.