News that Uber is being slapped with a lawsuit for alleged theft of trade secrets and patent infringements relating to Google’s automated car programme Waymo has come as yet another blow to the company.
It follows a string of revelations around CEO, Travis Kalanick’s alleged bad treatment of drivers and allegations of sexual harassment. The potential fallout from the lawsuit could well become the catalyst to Uber’s undoing.
Google, through its parent company Alphabet, is alleging that former Google engineer, Anthony Levandowski, sold the self-driving trucking company Otto – that Levandowski started after leaving Google abruptly last year – to Uber for more than half a billion dollars.
They allege that he stole 9,7GB of data from Google’s server before he left the company.
The data contained vital technology that Google was using for its self-driving car project and that this information was subsequently passed on to Uber following the acquisition.
According to Daniel Compton, a commentator and blogger at Daniel with music, Google has Uber against the ropes as far as the patent infringement charge is concerned. He has outlined some potential worse case scenarios for the embattled disruptor business.
The first could be that Uber be served with an injunction on their self-driving car project and this would mean having to start the project from scratch.
Uber’s reputation is bound to take a knock and this could result in a situation where Uber would struggle to raise more capital from investors in the future.
“With significant negative margins, no way to become profitable in sight and a terrible media narrative after the Alphabet lawsuit, sexual harassment, aggressive or illegal behavior, they cannot IPO,” Compton says.
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With no prospects of raising capital from a public listing and its self-driving car project still a long ways away from becoming a reality, Uber could find itself in a sticky situation if it’s unable to lower its costs.
“I suspect that a large part of Uber’s appeal is their low pricing. If they were to raise prices to cover their driver costs (not even covering the significant costs of their own operations), demand would dry up. Without any way to raise more money or reduce their costs, Uber runs out of money and folds,” says Compton.
– Additional reporting by Daniel with music