WAYMO V UBER

By

Sarthika Singhal

21LLB141

Semester I

Name of the Program: 5 Years B.A.,LL.B.(Hons.)

Professor Abhisekh Sinha

Date of Submission: 29 January 2022

DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

NYAYPRSTHA, SABBAVARAM,
VISAKHAPATNAM – 531035, ANDHRA PRADESH
 TABLE OF CONTENTS
ACKNOWLEDGEMENT.........................................................................................................3
SYNOPSIS.................................................................................................................................4
ABSTRACT...........................................................................................................................4
INTRODUCTION..................................................................................................................5
OBJECTIVES OF THE STUDY...........................................................................................6
LITERATURE REVIEW.......................................................................................................6
RESEARCH METHODOLOGY...........................................................................................6
SCOPE OF THE STUDY......................................................................................................6
SIGNIFICANCE OF THE STUDY.......................................................................................7
RESEARCH QUESTIONS....................................................................................................7
MODE OF CITATION..........................................................................................................7
UBER’S HISTORY..................................................................................................................8
WAYMO VS UBER ANECDOTE...........................................................................................8
ECONOMIC PROBLEMS IN DAMAGES CLAIM BY WAYMO ON UBER....................12
VALUE................................................................................................................................12
COST....................................................................................................................................13
TIME AND R&D.................................................................................................................13
UBER’S POLICY AND ECONOMIC CHALLENGES FOLLOWING THE LAWSUIT....14
BACKLASH AGAINST SURGE PRICING.......................................................................14
DRIVER PERKS AND A FAIR WAGE.............................................................................14
DISCRIMINATION, HARASSMENT, AND A HOSTILE WORK ENVIRONMENT
ALLEGATIONS..................................................................................................................15
DISCRIMINATION AGAINST A CLIENT WHO IS BLIND..........................................15
COMPETITION BETWEEN UBER AND LYFT..............................................................15
THE VICIOUS CYCLE OF ACQUISITION AND ECONOMIC IMPACT..........................16
Otto.......................................................................................................................................16
Geometric Intelligence.........................................................................................................16
Mighty AI.............................................................................................................................17
AURORA.............................................................................................................................17
CURRENT AND FUTURE BUSINESS MODEL OF UBER................................................18
CURRENT BUSINESS MODEL........................................................................................18
FUTURE BUSINESS MODEL...........................................................................................19
 ACKNOWLEDGEMENT

I would like to sincerely thank and express my gratitude towards our Economics professor
Dr. Abhisekh Sinha Sir for his guidance and continuous support in the making of the
project. The research would not have been successful without your guidance.

I would also like to express my gratitude to the DAMODARAM SANJIVAYYA

NATIONAL LAW UNIVERSITY library and the academic department for their incessant
support and availability of resources and books without which it would have been impossible
to execute this job within the time constraint.

I would also like to thank my parents and classmates for their unconditional support, as well
as their thoughts and opinions, which helped me back my project.

Thankyou.

Sarthika Singhal

SYNOPSIS
ABSTRACT
Founded in 2009, Uber’s exponential growth disrupted the modern transportation methods
and became one of the most valued startup company in the world at some point. Uber went
public on May 9, 2019, ten years after its start. Uber is still a key player in the ride-sharing
industry, despite its rough route. Uber recorded a net income of $1.1 billion, $3.9 billion in
sales, and 1.5 billion journeys on its platform in its most recent quarterly financial report for
fiscal year (FY) 2021.Although this journey was not without economic and legal challenges.
In an alleged technological theft by Uber’s employee, Waymo; Google’s company; filed a
lawsuit against Uber and reached to a settlement of 34% minority stake in Uber. Crashing of
technological giants' intellectual property is almost certain to occur yet again, in comparison
to their unprecedented progression, found themselves at the mercy of the one entity that many
critics have said seemed to have stood still in time - the law. The economic challenges
leading to its subsequent downfall in the self driving technology led to its acquisition by a
startup company called Aurora headed by a former head of Waymo.

The paper thus will try to study the economic impact the lawsuit brought to Uber’s equity
structure and their internal composition as well. The paper will also study the anecdote of
acquisition made by Uber and of Uber and the reasons citing the same. Lastly, the paper will
try to compare the present and tentative future working of the company based on the
economic and legal prospects at which the company stands now. The study is neccesary to
understand the muti-disciplinary impact of a law and economics. The study is important
because its argues that law doesn’t stays in isolation, instead it affects everything connected
with it, in the following case the micro economic details of Uber.

INTRODUCTION

Uber Technologies Inc. (UBER) is one of the most exciting firms to emerge in the last
decade, thanks to its tremendous expansion and continual controversy. The worldwide ride-
sharing software, which launched in 2009, revolutionised modern transportation and rose to
become the world's most valuable private startup company at one point. Waymo, Google's
self-driving initiative, later became the self-driving vehicle division of both Alphabet and
Google. The autonomy is enabled via a light ranging and detection technology, or LiDAR,
developed by the startup business 510 Systems, which was owned by Anthony Levandowski
before Google purchased it in 2007. (Korosec, 2018). The LiDAR is housed in a small
rotating eyeball on the car's roof, allowing it to scan the surrounding surroundings with its
lasers (Weise & Della Carva, 2018) and generate detailed 3D models of it (Korosec, 2018),
allowing it to manoeuvre safely (Weise & Della Carva, 2018). A single lens is used for this
(Zaveri, 2017). The two got into a legal tussle in 2017 on an alleged theft by Alexander
Levanoski, a Uber employee. The company’s self-driving segment fa ed a huge backlash in
terms of finance and pricing as a consequence of the same and eventual downfall every year.
This further led to its acquirion by Aurora, a self-driving company developer startup. The
paper thus also study the anecdote of acquisition made by Uber and of Uber and the reasons
citing the same. The paper will also try to compare the present and tentative future working
of the company based on the economic and legal prospects at which the company stands now

OBJECTIVES OF THE STUDY

o to study the economic impact the lawsuit brought to Uber’s equity structure and their
internal composition as well.
o To study the anecdote of acquisition made by Uber and of Uber and the reasons citing
the same.
o To compare the present and tentative future working of the company based on the
economic and legal prospects at which the company stands now.
o To understand the muti-disciplinary impact of a law and economics.

LITERATURE REVIEW
Several studies on the Waymo V Uber and its impact have been done. A review of certain
selected works on the same is attempted.

Aabri 2019 : The manuscript helped to give an insight into the legal perspective of the lawsuit
and the backdrop on which the issue evolved. Further, the manuscript helped in
understanding how the two companies settled their case out of the court in the interest of
cost-saving.
Dan Blyston 2019 : The article helped to implicate on the legal and policy challenges of Uber
following the lawsuit. The article also helped in understanding the reasons for acquistions
made by Uber.

RESEARCH METHODOLOGY
The researcher has used primary as well as secondary sources of data to provide support to
this paper. It is a composite research paper where the researcher has used descriptive,
narrative, expository and analytical methods to examine the economic impact of the lawsuit
on Uber.

SCOPE OF THE STUDY

This paper is confined to the study of economic impact on the equity of Uber. The study
restricts itself to not including its impact of the stakeholders like consumers, factories etc.
since the data of the self-driving cars is not available. The study thus confines itself to the
internal economic impact on the company only.

SIGNIFICANCE OF THE STUDY

. Just as law has an impact on economics, economics has an impact on law. Economics is, in
fact, the foundation of the study of law. Economics reflects the country's and the world's
socioeconomic ethos in general. According to the "law and finance" literature, the nature of a
country's law and the reliability of its legal system has a direct impact on economic
performance. Thus, the study is neccesary to understand the muti-disciplinary impact of a law
and economics. The study is important because its argues that law doesn’t stays in isolation,
instead it affects everything connected with it, in the following case the micro economic
details of Uber.
 RESEARCH QUESTIONS
o Whether there was any economic impact on the lawsuit brought by Waymo? If yes,
what were the key economic challenges faced by them?
o Whether there was any economic problem in the damage calculation by Waymo in the
lawsuit? If yes, what was the pathway Waymo would have taken?

MODE OF CITATION
Oxford mode of citation 4th Edition is being used in this research paper.

UBER’S HISTORY
Uber's journey began in 2008 in Paris. Travis Kalanick and Garrett Camp were attending
LeWeb, an annual digital conference dubbed "where revolutionaries congregate to predict the
future" by The Economist. 1 Both men had sold their co-founded firms for substantial sums
of money in 2007. Kalanick sold Red Swoosh for $19 million to Akamai Technologies, while
Camp sold StumbleUpon for $75 million to eBay (EBAY).1

When the two couldn't find a cab one cold night at the conference, they came up with the idea
for Uber. Uber began with a simple concept: "What if you could request a ride from your
phone?" The original plan was to create a timeshare limo service that could be requested
through an app. Following the summit, the entrepreneurs went their separate ways. However,
when Camp returned to San Francisco, he continued to be fixated on the idea and bought the
domain name UberCab.com.2

Camp was still the CEO of StumbleUpon in 2009, but he started working on an UberCab
prototype as a side project. Camp had convinced Kalanick to join UberCab as its "chief
incubator" by the summer of that year. The service was piloted in New York in early 2010,
with just three automobiles, before launching in San Francisco in May. In early 2010, Ryan
Graves, who was Uber's general manager and a key role in the company's early phases, was
named CEO. Kalanick was named CEO in December 2010, and Graves was promoted to
general manager and senior vice president of Global Operations. The app's growing
popularity was propelled by the convenience and simplicity of ordering a vehicle. A ride
could be requested with the touch of a button, the location was recognised using GPS, and the
fee was immediately paid to the user's card. The San Francisco-based business soon rose to
the top of the industry and expanded rapidly. The first Uber trip was requested in 2010, and
less than two years later, in 2011, Uber had already opened worldwide in Paris, where it all
began.3

WAYMO VS UBER ANECDOTE

WAYMO:

Waymo, Google's self-driving initiative, later became the self-driving vehicle division of both
Alphabet and Google. The autonomy is enabled via a light ranging and detection technology,
or LiDAR, developed by the startup business 510 Systems, which was owned by Anthony

1
Uber. "The History of Uber — Uber's Timeline." The History of Uber – Uber’s Timeline | Uber Newsroom
Accessed March 20, 2022.
2
Ibid.
3
Ibid.
Levandowski before Google purchased it in 2007. 4The LiDAR is housed in a small rotating
eyeball on the car's roof, allowing it to scan the surrounding surroundings with its lasers) and
generate detailed 3D models of it 5allowing it to manoeuvre safely6). A single lens is used for
this.7

UBER:

Uber Technologies Inc. (UBER) is one of the most exciting firms to emerge in the last
decade, thanks to its tremendous expansion and continual controversy. The worldwide ride-
sharing software, which launched in 2009, revolutionised modern transportation and rose to
become the world's most valuable private startup company at one point.8

ENTRY OF ALEXANDER LEVANDOWSKI

According to Stroz Friedberg, Uber executives met with Levandowski in July 2015 to discuss
his joining the team for Uber's self-driving project. Acqui-hiring was a part of the
arrangement, where teams of programmers that worked together on Google's project would
now go and Levandowski would start a new firm 9. Travis Kalanick, Uber's former CEO,
maintained the conversation with Levandowski in 2015, proposing to lead the company's
self-driving programme10. The idea, it appears, was to keep Uber from falling behind Waymo
in the race.

4
Korosec, K. Anthony Levandowski is back with a new self-driving startup, called Kache.ai. Retrieved March
11, 2022, from https://techcrunch.com/2018/07/02/anthony-levandowski-is-back-with-a-new-selfdriving-
startup-called-kache-ai/
5
Ibid.
6
Weise, Elizabeth and Della Cava, Marco. (2018, February 5). Self-driving cars: Uber faces Waymo in trial
over race to remove the driver. Retrieved March 16, 2022, from
https://www.usatoday.com/story/tech/2018/02/04/self-driving-cars-uber-faces-waymotrial-over-race-remove-
driver/300918002/
7
Zaveri, P. (2022, March 27). Judge in Uber-Waymo suit says Google co-founder Sergey Brin 'better show up.'
Retrieved March 27, 2022, from https://www.usatoday.com/story/tech/columnist/2017/07/27/judge-uber-
waymo-suit says-google-co-founder-better-show-up/514641001/
8
Uber. "The History of Uber — Uber's Timeline." The History of Uber – Uber’s Timeline | Uber Newsroom
Accessed March 20, 2022.
9
Bhuiyan, J. (2022, Feb 05). Here’s what we learned from Day 1 of the Uber and Alphabet trial. The trade
secrets lawsuit between Uber and Alphabet’s self-driving arm Waymo began today. Retrieved March 16, 2022,
from https://www.recode.net/2018/2/5/16974668/uber-alphabet-waymo-self-driving-tradesecrets
10
Hawkins A. J. (2018, February 05). Here’s what you need to know about the Uber-Waymo trial, which starts
today. The year’s most unlikely and hilarious trial is about to begin. Retrieved March 16, 2022, from
https://www.theverge.com/2018/2/5/16955312/uber-waymo-trial-self-driving-cars preview
Shortly after, in the same year, Levandowski allegedly took 14,000 documents from the
Waymo system, totaling 9.7 gigabits. Waymo's files were downloaded and kept on five discs
on his personal Drobo 50eight trade secrets about the company's self-driving car project .11

WAYMO’S ALLEGATIONS:

According to Waymo's CEO, John Krafcik, in January 2016, Levandowski began expressing
his dissatisfaction with Google's direction for the self-driving car programme by stating it
was flawed, and he battled for authorization to go against his coworkers, claiming that
development was too sluggish for him . Google was adamant about not taking that risk at the
expense of security (Id). Levandowski and Lior Ron left Google and founded Otto, a self-
driving trucking firm, in February 2016. In August 2016, Uber paid $680 million for Otto,
and as part of the deal, Levandowski was appointed as the company's self-driving program's
chief .12

Uber used ex-CIA officers who were unknown to Uber's competitors to spy on them as well
as Uber's own workers and contractors .13

Furthermore, Uber used these services to construct systems that would trick lawyers and
regulators into believing that papers Uber sought to keep hidden simply did not exist.
Ironically, Uber's LiDAR supplier published a drawing board of one of their circuits,
depicting the LiDAR technology, on a chain email that mistakenly included a Google
employee . Waymo investigated, and Nevada regulatory authorities confirmed that Uber had
submitted papers demonstrating that it was developing its own LiDAR technology.14

WAYMO FILED A LAWSUIT:

In the United States District Court for the Central District of California, Google filed an
injunction against Uber, ordering it to stop utilising its intellectual property and trade secrets.
In addition, Google has filed a lawsuit seeking reimbursement for the technology's use thus
far Uber vehemently refuted the allegations, claiming that it had no intention of stealing

11
Frankel, C. T. (2017, April 07). Uber fires back at Waymo's lawsuit alleging theft of trade secrets. Retrieved
March 16, 2022, from https://www.washingtonpost.com/news/innovations/wp/2017/04/07/uber-strikes-
backagainst-waymos-lawsuit-over-alleged-stolen tradesecrets/?noredirect= on&ut m_term=.362eed956a8d
12
Wakabayashi, D. (2018, February 5). Waymo v. Uber Trial Opens With a Battle of Sports Metaphors.
Retrieved March 16, 2022, from https://www.nytimes.com/2018/02/05/technology/uber-waymo-trial.html
13
Weise, Elizabeth and Della Cava, Marco. (2018, February 5). Self-driving cars: Uber faces Waymo in trial
over race to remove the driver. Retrieved March 16, 2022, from
https://www.usatoday.com/story/tech/2018/02/04/self-driving-cars-uber-faces-waymotrial-over-race-remove-
driver/300918002/
14
Ibid.
Google's proprietary knowledge; in fact, Google's LiDAR technology only has one lens,
whereas Uber's has four 15Uber asked Levandowski's cooperation in giving information in
order to prove that its concepts were unique. Instead, he pleaded the fifth.

As a result, Uber dismissed him.Uber's argument is that after purchasing Ottomotto, it

repeatedly told Levandowski not to transfer any Google intellectual property. Mr.
Levandowski's computer data, to which he had access while at Google, never made it to
Uber's systems, according to Uber. Uber settled with Alphabet for $245 million, or.34 percent
of Uber's 2007 valuation of $72 billion, within five days of the trial starting in February
201816. It also pledged not to use any of Alphabet's trade secrets in any of its hardware or
software creations.

WAYMO’S CLAIMS AND UBER’S DEFENSES:

According to the evidence presented, Anthony Levandowski stole Waymo's trade secret
without the knowledge or permission of Alphabet, Google, or Waymo when he downloaded
14,000 documents, including software, files, and source code relating to Waymo's self-
driving cars, to his personal storage devices with the intent of leaving Google. If the trade
secret is connected to a product or service utilised in, or intended for use in, interstate or
international commerce, the owner of the trade secret may file a civil action under this
paragraph.17 As a result, if Waymo believes Uber benefited as a result of the litigation, it may
file a civil action against Levandowski and Uber.

The evidence against Levandowski was indisputable in this instance. Uber, on the other hand,
has stated unequivocally and presented evidence that, while it used LiDAR, as have others in
the industry, there was no way it could have misappropriated Waymo's trade secrets because
none of the secrets were used in Uber's design, which was fundamentally different from
Waymo's. Uber also claimed that there was insufficient evidence to determine that any of
Waymo's proprietor's information was shared with Uber. This was further backed by the fact

15
Frankel, C. T. (2017, April 07). Uber fires back at Waymo's lawsuit alleging theft of trade secrets. Retrieved
March 16, 2022, from https://www.washingtonpost.com/news/innovations/wp/2017/04/07/uber-strikes-
backagainst-waymos-lawsuit-over-alleged-stolen tradesecrets/?noredirect= on&ut m_term=.362eed956a8d
16
Felton, R. (2018, February 09). Google's Waymo And Uber Reach $245 Million Settlement In High-Profile
Lawsuit Over Stolen Autonomous Tech. Retrieved March 16, 2022, from https://jalopnik.com/googles-waymo-
and-uber-reach-settlement-in-high-profile1822868808
17
Jeong, S. (2018, March 20). Uber’s former head of self-driving cars put safety second. Evidence previously
surfaced in the Waymo v. Uber trial told of Anthony Levandowski’s ambivalence towards car safety. Retrieved
March 28 from https://www.theverge.com/2018/3/20/17144090/uber-car-accident-arizona-safetyanthony-
levandowski-waymo
that Lior Ron, co-founder of Otto, tried to delete Waymo's data from his devices. Of course,
Waymo had the benefit of an email from a Morrison & Foerster lawyer who was engaged in
Otto's investigation before to Uber's acquisition. Levandowski possessed "very secret
information" including source code, design software, and "everything you need to develop a
self-driving vehicle," according to the email O18f course, this did not rule out the possibility
that the material was Otto's, which was the subject of an inquiry, and Alphabet would have
had to present the weight of the evidence establishing that these highly private papers
belonged to it. Waymo said that Uber's former CEO Travis Kalanick's "win-at-all-costs
mentality and impatience, as well as his conduct, drove him to conspire with Levandowski to
steal the'sauce' that pushed Alphabet's self-driving programme to the front of the pack". 19 It
could be argued that the "sauce" was the acqui-hiring that occurred after Kalanick and
Levandowski agreed on the actions to be taken against Waymo, and then Levandowski
persuaded other members of Waymo's self-driving project's engineer team to join him, the
pioneer of commercially viable LiDAR, at Otto, which would later provide service to Uber
before being acquired by Uber. However, it's possible that the "sauce" was a trade secret
obtained by Waymo when Levandowski was working for the company. Though acquihiring
was not illegal, it was done with the aim to hurt; and the desire to acquire, as well as the act
of gaining another's trade secret, were both prohibited, and both were terrible conduct on the
part of the former CEO for the advantage of Uber.

Waymo has proof of Kalanick's words to the effect that "we want their cheat codes," referring
to Waymo. "We need to work through the approach to use all the shortcuts we can discover,"
he said. I just regard this as a race that we must win; second place is the first loser. 20 Uber's
response was that Alphabet was just envious of Uber's top personnel, since Waymo has
shown fear about losing brilliant employees. There is no responsibility in top personnel
leaving firms, and it was merely another stride toward lawful competition in a competitive
sector. Regardless of the underlying logic of free competition, Waymo's purported fear is not
a defence to Kalanick's conduct, and no proof to refute these charges was given.

18
Bhuiyan, J. (2022, Feb 05). Here’s what we learned from Day 1 of the Uber and Alphabet trial. The trade
secrets lawsuit between Uber and Alphabet’s self-driving arm Waymo began today. Retrieved March 16, 2022,
from https://www.recode.net/2018/2/5/16974668/uber-alphabet-waymo-self-driving-tradesecrets
19
Ibid.
20
Jeong, S. (2018, March 20). Uber’s former head of self-driving cars put safety second. Evidence previously
surfaced in the Waymo v. Uber trial told of Anthony Levandowski’s ambivalence towards car safety. Retrieved
March 28 from https://www.theverge.com/2018/3/20/17144090/uber-car-accident-arizona-safetyanthony-
levandowski-waymo
RULLING:

The trial began on February 5, 2018, after a year of preparation. Waymo and Uber, on the
other hand, rapidly resolved the matter on February 9. Uber will offer Waymo a $245 million
ownership share in exchange for a commitment to work with Waymo to guarantee that its
self-driving technology is based entirely on Uber software.

ECONOMIC PROBLEMS IN DAMAGES CLAIM BY

WAYMO ON UBER
Waymo exemplifies the efforts that should be made by plaintiffs to link their losses to the
particular theft. Without proof that the product, system, or process derives all of its value
from the stolen trade secret, simply allocating value to a discrete trade secret based on
predicted profits or avoided expenses for the whole product, system, or process will not
satisfy the dependability standard. Waymo should have calculated the following attributes
while calculating its damage claim which it eventually failed to do in the economic scenario:

VALUE
Above all, plaintiffs must determine the proportion of the whole product's worth that may be
attributed to the trade secret.21Uber, for example, maintained that unique hardware-related
trade secrets were worthless in comparison to the software necessary for self-driving
vehicles. Wagner submitted no technique or research to establish what percentage of
predicted future earnings may be attributed to Waymo's trade secrets against genuine
technology that was not the subject of the theft allegation. Of fact, there are times when a
single hidden component is responsible for the whole value of a product. In such instances,
apportioning damages may not be required.22 Waymo, on the other hand, wants detailed proof
to back up the damages expert's claims. Plaintiffs should cooperate with a technical expert to
comprehend the trade secret's function and contribution to the whole, so that a damages
expert can convert that contribution into future value. See Apple Inc. v. Samsung Electronics
Co., 809 F.3d 633, 641-44; Apple Inc. v. Samsung Electronics Co., 809 F.3d 633, 641-44;
Apple Inc. v. Samsung Electronics Co., 809 F.3d 633, 641-44; Apple Inc. v. Samsung
Electronics Co., 809 F.3d 633, 641-44; Apple Inc. v. Samsung Electronics Co. (Fed. Cir.
2015) (Plaintiff must establish that infringing characteristics were relevant in consumer
purchase decisions in a patent suit involving consumer preferences).

COST
Plaintiffs should also break down their R&D "burn rate" to illustrate how much of their
budget was spent on developing the alleged trade secrets. According to Waymo's expert, if
misappropriating a component trade secret saved Uber one year in the time it would have
taken to create that component otherwise, then Uber saved a whole year's R&D costs for the
self-driving vehicle project. Costs attributable to legitimate expenditures (e.g., overhead) and
costs linked to the (probable) concurrent development of other components and technologies
were not taken into account by the model. Technology developers should produce itemised
R&D budgets and preserve employee time records for people working in numerous
development projects to lessen the burden of cost apportionment.23

21
efelle creative, 'Parker, Hudson, Rainer & Dobbs LLP - Proving Damages In An Emerging Industry: Lessons
From Waymo V. Uber' (Parker, Hudson, Rainer & Dobbs LLP, 2022) <https://www.phrd.com/news/proving-
damages-in-an-emerging-industry-lessons-from-waymo-v-uber#_ftnref7> accessed 28 March 2022.
22
Ibid.
 TIME AND R&D
Furthermore, plaintiffs should evaluate the total development timeframe, which includes the
time necessary to produce all components of the product, as well as the time saved in the
creation of an individual component. Wagner reasoned that the time saved as a consequence
of the theft of a single trade secret accelerated the overall development timetable in the same
way. That assumption was refuted by Uber's evidence that any expedited development of
discrete hardware components would have no effect on the total time to market for self-
driving vehicles. In other cases, plaintiffs may discover that time saved on a single
component does not equate to an earlier to-market date, making the lost-profits model for
unjust enrichment damages less persuasive than the saved-costs approach.24

UBER’S POLICY AND ECONOMIC CHALLENGES

FOLLOWING THE LAWSUIT

BACKLASH AGAINST SURGE PRICING

Uber raises pricing depending on market supply and demand using an automated algorithm.
Prices surged to as much as seven times usual rates on New Year's Eve 2011, eliciting critical
reaction from consumers. During a blizzard in New York in December 2013, surge pricing
sparked uproar once again. Uber has agreed to restrict surge pricing in New York City during
numerous blizzards. Taxi drivers in London, Berlin, Paris, and Madrid organised a massive
23
efelle creative, 'Parker, Hudson, Rainer & Dobbs LLP - Proving Damages In An Emerging Industry: Lessons
From Waymo V. Uber' (Parker, Hudson, Rainer & Dobbs LLP, 2022) <https://www.phrd.com/news/proving-
damages-in-an-emerging-industry-lessons-from-waymo-v-uber#_ftnref7> accessed 28 March 2022.
24
Ibid.
anti-Uber demonstration in 2014. Uber has been accused of unfair competition by taxi
businesses, which believe that it does so by avoiding costly licencing payments and skirting
local rules. In November 2016, Europe's highest court heard the case. In September 2017,
Uber's authorization to operate in London, where it had 40,000 registered drivers, was
revoked. A London court overturned the prohibition on June 26, 2018, essentially enabling
Uber to operate under a 15-month licence with restrictions.25 Uber was awarded a fresh
licence to operate in London in September 2020. The present licence is for 18 months and is
contingent on Uber producing safety reports on a regular basis.26

DRIVER PERKS AND A FAIR WAGE

In New York, it was revealed that Uber had wrongly charged drivers commission based on
pre-tax profits rather than after-tax earnings, costing New York drivers tens of millions of
dollars. It was an accounting blunder, according to the corporation, and it was dedicated to
paying its drivers in full as soon as possible.The problem raises concerns about the fairness of
who pays the taxes in the end. For a long time, driver advocacy organisations have claimed
that Uber is evading a tax at the cost of its drivers, a claim that The New York Times
uncovered data to back up. It may have cost drivers hundreds of millions of dollars,
according to the report.27

On June 13, 2017, a New York court determined that Uber drivers, at least in certain
situations, should be deemed employees rather than independent contractors. This decision
allows drivers to access employee benefits, which will almost certainly have a big financial
effect. 18 Later, the New York City Council imposed licencing limits, which was a setback
for Uber and resulted in a 12-month moratorium on any new permits for the ride-sharing
service in the city. 19 Meanwhile, in November 2020, California voters approved Proposition
22, which allows firms like Uber to identify their workers as independent contractors rather
than full-time employees in the gig economy. 2021 With over $200 million spent on

25
Transport for London. "Uber Licensing Appeal Final Judgment," Page 7
https://tfl.gov.uk/info-for/media/press-releases/2017/september/licensing-decision-on-uber-london-limited.
Accessed March 19, 2022.
26
Ibid.
27
New York Times. "How Uber's Tax Calculation May Have Cost Drivers Hundreds of Millions."
https://www.nytimes.com/2017/07/05/business/how-uber-may-have-improperly-taxed-its-drivers.htmlAccessed
March 19, 2022
campaigning, the Uber-backed ballot proposal is officially the most expensive in California
history. 22

Judge Frank Roesch of the Alameda County Superior Court declared on Aug. 20, 2021, that
two provisions of Proposition 22 were unconstitutional and that the whole initiative was
unenforceable. It remains in place, though, while its supporters appeal his decision. 23

DISCRIMINATION, HARASSMENT, AND A HOSTILE

WORK ENVIRONMENT ALLEGATIONS

Uber settled a 2017 lawsuit claiming gender discrimination, harassment, and a hostile work
environment by paying $7 million to more than 480 present and former workers. Uber was
accused of using a discriminatory rating system that devalued female and minority workers,
according to the complaint.

DISCRIMINATION AGAINST A CLIENT WHO IS BLIND

In April 2021, an arbitrator ordered Uber to compensate Lisa Irving, a blind client, $1.1
million. Uber's drivers had discriminated against Irving by rejecting her rides or verbally
insulting her more than a dozen times, according to the arbitration. Due to the drivers'
position as independent contractors, Uber said it was not liable for their acts. 28

COMPETITION BETWEEN UBER AND LYFT

Between Uber and its closest competitor, Lyft, there has been fierce competition. Both Uber
and Lyft claimed in 2014 that drivers and workers were sabotaging one other's services by

28
American Arbitration Association. "Lisa Irving v. Uber Technologies, Inc.," Pages 2 and 22. Accessed March
19, 2022.
hailing and cancelling trips on each other's services on a frequent basis. In a Vanity Fair
piece, Kalanick also acknowledged to attempting to sabotage Lyft's financing efforts.29

THE VICIOUS CYCLE OF ACQUISITION AND

ECONOMIC IMPACT
Uber acquired various small companies before its lawsuit with Waymo, but eventually got
acquired by Aurora in its self-driving solutions, thereby creating a cycle of acquistions which
are discussed below. The paper will also try to reflect on the reasons of it been acquired by
Aurora recently in 2021.

Ber's self-driving research team received some assistance from the company's acquisitions.
Uber acquired a total of 12 companies, three of which were directly tied to self-driving
technology.

29
Vanity Fair. "Man and Uber Man." Accessed March 19, 2022.
 Otto
Uber's first and most well-known purchase, Otto, in 2016, was likely the company's most
significant shift away from ride-hailing. Unfortunately, Uber's purchase of Otto proved a
misfortune, since the firm was forced to dispute Waymo for trade secret theft by Otto's co-
founders Anthony Levandowski. Uber had to shut down the Otto project in order to
concentrate on self-driving vehicles and their core business. Otto spent a lot of time
investigating LiDAR technology, so even if Uber shut down, Otto's technology could still be
used to better Uber's self-driving cars, or rather Aurora's Avs

Geometric Intelligence
In December 2016, Uber purchased GI, which had also developed a dedicated AI lab for
self-driving research. Geometric Intelligence pioneered machine learning with cutting-edge,
patent-pending approaches that learn faster with less data. "It includes training a self-driving
machine to traverse the environment safely and independently, whether it's a vehicle on the
road, an aeroplane through congested airspace, or new forms of robotic gadgets." Uber's chief
product officer, Jeff Holden, announced the formation of Uber AI Labs in a blog post. The
purchase aided Uber's AI efforts more widely, with a focus on fundamental research that has
the potential to influence a wide variety of applications, including route management.

Mighty AI
In June 2019, Uber purchased Mighty AI, a company that creates training data for computer
vision models. In a statement, Jon Thomason, vice president of software engineering for
Uber's Advanced Technologies Group, stated, "The team at Mighty AI has developed
technology to the label at scale utilising the latest AI and user experience methodologies."
Uber bought Mighty AI's intellectual property, tools, tech talent, and labelling community,
and around 40 Mighty AI personnel joined Uber's Seattle engineering office as a team inside
Uber's self-driving business.When things don't go according to plan What was the company's
self-driving vision?Uber had hoped to get self-driving taxis on the road as soon as feasible. It
may have been its ticket to profitability, but even with Aurora, it would have been a massive
struggle to accomplish. Uber intended to deploy its self-driving vehicles in places with the
best weather, demand, roads, and other factors. Uber's newly conceived unorthodox approach
was created to assist the company in cutting expenses and demonstrating to investors a clear
path to profitability.
 AURORA
With the multibillion-dollar sale of its driverless vehicle section to a Silicon Valley firm,
Uber has abandoned its plans to construct its own self-driving car.The ride-hailing firm is
selling Advanced Technologies Group (ATG) for a reported $4 billion (£3 billion) to Aurora,
a start-up funded by Amazon and Sequoia Capital that manufactures sensors and software for
autonomous cars. As part of the agreement, Uber will invest $400 million in Aurora in
exchange for a 26% minority ownership. Dara Khosrowshahi, the CEO of Uber, will join
Aurora's board of directors. Aurora will also have access to an automaker, Toyota of Japan,
which has invested in ATG. ATG has expanded to a workforce of 1,200 people.Uber said it
will work with Aurora in the coming years to add self-driving vehicles to its network. "Few
technologies have as much promise as self-driving cars for improving people's lives with
safe, accessible, and environmentally friendly transportation. "Our fantastic team at ATG has
been at the vanguard of this endeavour for the past five years – and by partnering with
Aurora, they are now in pole position to deliver on that promise even quicker," Khosrowshahi
added."I'm excited to collaborate with [Aurora CEO] Chris [Urmson] and introduce the
Aurora Driver to the Uber network in the next years." Since 2015, when then-CEO Travis
Kalanick founded Uber's driverless vehicle division in Pittsburgh with the goal of cutting
costs, developing autonomous technology has been a top priority for the company.

Uber was ahead of competitors like Google and Tesla in the race to construct "robotaxis" at
the time. However, in 2018, an autonomous Uber vehicle killed a lady who was crossing the
street in Arizona, and it has also become embroiled in legal conflicts, with Google's self-
driving car project Waymo suing Uber for alleged technology theft. Uber has grown into
other industries like as food delivery under Khosrowshahi's leadership. Investors have
pressed the business, which went public in 2019, to concentrate on being profitable. Aurora
was formed in 2017 by Urmson, a founding member of Uber's self-driving team, Sterling
Anderson, who previously worked at Tesla, and Drew Bagnell, the chief technical officer.

The main reasons for the same is the Waymo V Uber lawsuit and the death following the
failure of Uber’s self-driving technology and its subsequent ban by the US authorities.30

30
'Aurora Acquiring Uber's Self-Driving Research Unit In Blockbuster Deal - News AKMI' (News AKMI,
2022) <https://newsakmi.com/automotive-news/aurora-acquiring-ubers-self-driving-research-unit-in-
blockbuster-deal/> accessed 28 March 2022
 CURRENT AND FUTURE BUSINESS MODEL OF
UBER
CURRENT BUSINESS MODEL
Uber is a two-sided platform that connects drivers and passengers. It does not own the
automobiles and instead rely on independent drivers who drive their own vehicles. Because
the drivers are independent contractors, Uber saves money. Uber created a high network
effect and facilitated quick development into new areas since it is a two-sided platform with
little assets. Unlike the automobile rental industry, where multiple businesses serve different
markets and geographies, the ride-share industry is extremely consolidated, resulting in a
winner-take-all scenario.

However, one of the most significant effects of self-driving cars might be the abolition of
individual automobile ownership. A private automobile is only used 5% of the time and is
usually stored in a garage or parking lot when not in use. Around 20% of commercial
property in major U.S. cities is utilised for parking, which is a massive waste of resources.
When self-driving cars are used in ride-sharing services, the trip fee might be reduced to 1/3
or even 1/5 of what it is now, when driver salaries and utilisation are taken into account. In
contrast, owning a private automobile would be too costly. Uber's economic model as a two-
sided platform is breaking as more people cease owning private automobiles.

FUTURE BUSINESS MODEL

As a result, in order to keep costs low and maintain a vast vehicle network, Uber must create
and operate its own fleet of cars. Uber may collaborate with established automakers to
combine sensors and computer systems. Because Uber has such a large user base, it may seek
preferential treatment from vehicle manufacturers in terms of data ownership and revenue
sharing for in-car services. Because Uber has extensive competence in artificial intelligence
and robotics, it could potentially build the software and algorithms that power self-driving
cars and licence the technology to auto manufacturers.

Self-driving vehicle technology is now quite costly, but like many other computer
technologies, its price is predicted to drop drastically in the future. If a self-driving vehicle
costs $50k more to create, the cost is amortised over 5 years to $10k, compared to an Uber
driver's current annual pay of roughly $50k 31. This savings will allow Uber to repay the cost
of owning the car while also lowering the fee for consumers.

Uber's enormous network of Uber drivers may be a crucial distinction in the development of
the technology. Extensive road testing and sensor data collecting are required to increase the
intelligence and reliability of self-driving technology. Google, for example, is developing and
running a small fleet of self-driving vehicles that need full-time staffing. Instead, Uber could
equip current cars with sensors and computers, as well as pay Uber drivers a modest stipend
to gather data on the road. This crowdsourcing strategy might be significantly less expensive
than Google's and allow for a bigger scale of road testing and data collecting, giving you a
competitive advantage in terms of software and algorithm performance.

With this advantage, Uber might look at licencing self-driving technology to the trucking and
delivery industries. The total number of truck and delivery drivers employed in the United
States is now 1.6 million and 800 thousand, respectively, representing a combined market of

31
Uber: Changing the Way the WOrld Moves, HBS Case 9-316-101
$90 billion 32. If Uber can acquire 10% of this market with its self-driving technology, it will
generate $9 billion in annual income.

CONCLUSION

Economics and Law both being social sciences implicate a substantial affect on each other
which we saw in the case of Waymo V Uber. The legal challenge brought a complete change
in the way the self-driving segment of the both the companies functioned and their
composition as well. A greater harm was implicated on Uber in terms of the price upsurge
and other policy challenge. The race for better technology and subsequent rifts and the desire
to kick out the competitions further led to implications to Uber in terms of its R&D. Uber’s
failure in the self-driving show us how the legal implications can impact the company as a
whole. The funds saved for the development of the company was used up in the law suit and
the settlement that followed which led to the weakening of the company on part of its lesser
expenditure on R&D and product development. It subsequently failed in its test drives and
was thus banned on conducting further test due to a death due to technological defect. The
following events led to its acquisition by Aurora. Thus, Waymo V uber is an ideal example of
the multi-disciplinary impact of social sciences.

32
Light Truck or Delivery Services Drivers, Bureau of Labor Statistics
http://www.bls.gov/oes/current/oes533033.html
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