Pando

Travis Shrugs: Pando goes to the Uber/Waymo trial, pt 3

By Dan Raile , written on February 9, 2018

From The Travis Shrugged Desk

In September 2015, at the height of San Francisco’s Indian Summer, then-Uber CEO Travis Kalanick sat beside Salesforce CEO Marc Benioff in front of a crowd of tens of thousands, on a stage erected in the middle of a closed-off street in the heart of the city, and explained his vision for the future.

Someday he wanted to stand at the top of Salesforce Tower, look down upon a streetscape where every car was an Uber. “If they were, the world would be a better place,” he said. He didn’t say for whom. 

At the time Salesforce Tower was a hole in the ground two blocks from crowds sweating under the jumbotron. Today it is near completion, and Travis Kalanick’s vision has fallen apart. 

On Friday morning, Google and Uber settled a trade secrets litigation that has consumed hundreds of millions of dollars in legal expenses and dismantled Uber’s self-driving rideshare aspirations. Since the suit was filed last Spring, Kalanick has lost his job and his control over Uber’s board. Uber has lost the leader of its self-driving car team, lost domestic market share, seen its valuation deflate, and sold off a significant portion of the company to global interests holding big stakes in its consolidating rivals.

By 8am hundreds of pounds of now obsolete paper had been trucked out of the courtroom on hand carts, the jury had been disbanded, and the audio-visual equipment had been returned to storage. The only sign that the Waymo v. Uber circus had ever been in town was the dozen or so shell-shocked journalists occupying the benches in the hallway, suddenly relieved from the duty of live-tweeting their immediate impressions on the trial proceedings, tasked now to deliver incisive analysis of the confidential agreement between the parties. 

One by one they conducted interviews with their hard-won contacts in the communications departments of either party, and soon the takes started to dribble out into the ether over the courthouse wifi, each couched in the timbre of their publication’s brand and completely oblivious of their role in the unfolding drama. 

***

Now, as for that inevitable post match analysis: Who won? 

Over a year of pretrial maneuvers, Google was adamant that this case go before a jury (and gallery of job-insecure content mongers). At every turn Uber tried to remove the case to the more comfortable confines of a private arbitration. Google resisted, unironically alluding to its dedication to the ideals of the public judicial process, the ironclad arbitration clauses in its employment contracts notwithstanding. 

Over a week of trial, Waymo…err… Google…was able to present nearly the entirety of its case to the jury, and somewhat less of it to the press, since all overt discussion of trade secrets – what they were and the extent to which they’d been misappropriated – was closed to the public. Adding humiliation to injury, Google compelled Travis Kalanick to take the stand and grovel about how he thought of Larry Page as an older brother, how dearly he’d wanted to partner with Larry until the very end, how hurt he was when Larry spurned him. Certainly, Kalanick insisted on his innocence. But his testimony might have been the final nail in the reduction of his persona from rising capitalist übermensch to petulant wannabe. 

On Thursday, Google had its best day yet in court. First it wrapped up questioning the leader of the firm which had handled Uber’s due diligence of Otto, the company helmed by the now-infamous ‘Xoogler’ Anthony Levandowski.

Google induced him to admit that he couldn’t assure that Levandowski hadn’t retained the files he’d purloined from Google, and that Uber had finalized the transaction despite the fact that due diligence had not been completed. Moreover, Uber conceded that Kalanick himself had told Levandowski to shred files – “do what you have to do” – contrary to the advice and prototocols of the diligence team. Finally, the diligence man admitted that though his firm found evidence of several external drives being connected to Levandowski’s laptop during a period where that laptop was known to store Google’s confidential information. The diligence team hadn’t examined those devices, so couldn’t ultimately say whether Levandowski had brought it to Uber, after thousands of hours of investigations. Next they turned to this diligence executive’s underling, who had worked more directly on the forensic analysis of Otto’s devices. She corroborated and solidified the point. The due diligence team was aware that Levandowski had the files, and had connected external devices to the computer that held them. She personally had thought those devices were important for determining whether Levandowski had retained proprietary Google information, but examining those devices was outside the scope of the diligence contract with Uber, since Levandowski had not voluntarily handed them over. So much for diligence. The fact that some of the files and folders that were NOT investigated were named after internal Google self-driving car programs didn’t help appearances. So much for due diligence, which was pretty well summed up by the final question and answer pair of this testimony: 

[Waymo council] Charles Verhoven: But you cannot foreclose that some of Google’s confidential information made its way to Uber’s servers?”

[due diligence team member] Melony Maugeri: That’s correct. 

Next Google called Bill Gurley, of Benchmark capital and formerly of Uber’s board. Over the brief course of his testimony he established that:

1) In contradiction to Kalanick’s testimony, Kalanick had led the presentation of the Otto deal to the board and

2) had made assurances to the effect that the due diligence was complete and came back clean, and

3) that he (Gurley) had been struck by the deal’s “atypical” indemnification clause, in which Uber had assumed liability for “bad acts” perpetrated by Levandowski and Otto, including past trade secret misappropriation. 

Next up was Andy Crain, an independent forensics investigator hired by Google to review data examined by Uber’s due diligence firm, in order to ascertain whether that diligence effort had been effective. Unsurprisingly, he concluded that it was not. Specifically though, his testimony introduced evidence that Levandowski had indeed copied Google information onto external disks that he never turned over to the diligence team, and also that one of those devices had been dubiously named “NEWCO.” 

This was followed by testimony from two Google employees, a security guy and an electrical engineer on the self-driving car team. The security guy asserted –surprise – that Google has top-notch security, and its internal servers are strongly protected against external threats . The engineer noted that the server which Levandowski accessed for the first and only time on the day after he met with Kalanick, just before he quit Google, contained very important proprietary information including trade secrets. These two witnesses served to confound one of Uber’s prevailing counter-narratives which was basically: If that stuff was so important, why wasn’t it better protected and why didn’t it set off any alarms when Levandowski accessed it and downloaded all of its content. The response? Only relevant self-driving car program employees like Levandowski could access the server, that they did so regularly, and that only the then-unknown fact of Levandowski’s concurrent plans to form and sell a nonexistent company to Travis Kalanick elevated his download to the level of alarum. 

The public portion of the day’s hearing ended with half an hour of vexing testimony from another Google engineer whose rapid-fire technical jargon, pronounced French accent and inscrutable syntax made his testimony nearly incomprehensible. Luckily for the court reporters, the settlement excuses Pierre from further metagrobolizing the transcripts.

Uber’s attorneys seemed meek on the attack of each of these witnesses even as they lashed together a pretty compelling account of how the secrets left Google, a plausible pathway by which they could have made their way to Uber, and laying at Uber’s own feet the fault for the uncertainty over whether this path had actually found its way to that end.  

Friday was scheduled to be a day of technical testimony in which Google presented its case that Uber’s self-driving cars had incorporated the stolen secrets. The world will never know, though we can be certain that no Google-secret-derived self-driving cars will ever roll out of Uber. 

Of course, we’ll never know if Uber could have introduced a sufficient element of doubt over the course of its own witnesses. But by the end of yesterday’s testimony, it was clear that Google had gathered together the ingredients of a persuasive closing argument. 

***

So where does this all leave us, as the kimono closes? 

With the benefit of court-ordered document disclosure, the public has been given an intimate view of the cult of toxic masculinity. Every single Google and Uber executive and engineer who made even an off-stage appearance in this courtroom drama was a man; the women in the saga were all dispersed much further down the org chart. And this was a textbook display of the ‘Art of War’-alluding, vying, elbowing, self-glorifying, world-conquest-aspiring prevailing attitude in the Silicon Valley boardroom, with no hint of change or remorse. 

Uber continues to struggle in a valuation trap after taking a year of heavy damage. It is no longer the clear leader in the global contest for rideshare supremacy, as Lyft carves into its domestic market share while Didi enhances its position in China and beyond. Its CEO, his right-hand man, and the chief of its self-driving car program are all gone, and so is its momentum. Travis Kalanick’s soaring ambition has been all but squelched.

Meanwhile Google has cemented its position of strength in the unproven but much-hyped market for driverless ridesharing to come. It’s made a big investment in Lyft, grown its stake in Uber, and once its self-driving technology is ready (when will that be?) it can choose its partners. Perhaps by that point Uber will be realistically priced and Google can snap up its installed base and user data for a song, a la Larry Ellison.

Uber has been vanquished to the point that an AI-augmented Larry Page can turn his attention to the big fight: who is the next Steve Jobs? It depends on who you think Steve Jobs was. In a week where Elon Musk launched a rocket to Mars and laid claim to the ‘visionary’ Jobsean aspect, Larry has made an equally convincing case for being the heir apparent to Jobs’ intransigent asshole streak, by playing the long game, vanquishing foes without mercy and playing the world’s press outlets like a symphony orchestra. 

And as for Travis, now approximately one pound of flesh lighter, be wary. Hell hath no fury like a billionaire bro scorned.