Waymo And Uber's Settlement Is A Good Thing: Focus On Innovating, Not Litigating

Back in December, right before the Waymo/Uber trial was supposed to begin (before it got delayed due to an unexpected bombshell about withholding evidence that... never actually came up at the trial), I had a discussion with another reporter about the case, in which we each expressed our surprise that a settlement hadn't been worked out before going to trial. It seemed as though part of the case was really about the two companies really disliking each other, rather than there being a really strong legal case.

A year ago, when the case was filed, I expressed disappointment at seeing Google filing this kind of lawsuit. My concern was mainly over the patent part of the case (which were dropped pretty early on), and the fact that Google, historically, had shied away from suing competitors over patents, tending to mostly use them defensively. But I had concerns about the "trade secrets" parts of the case as well. While there does seem to be fairly clear evidence that Anthony Levandowski -- the ex-Google employee at the heart of the discussion -- did some sketchy things in the process of leaving Google, starting Otto, and quickly selling Otto to Uber, the case still felt a lot like a backdoor attempt to hold back employee mobility.

As we've discussed for many years, a huge part of the reason for the success of Silicon Valley in dominating the innovation world has to do with the ease of employee mobility. Repeated studies have shown that the fact that employees can switch jobs easily, or start their own companies easily, is a key factor in driving innovation forward. It's the sharing and interplay of ideas that allows the entire industry to tackle big problems. Individual firms may compete around those big breakthroughs, but it's the combined knowledge, ideas, and perspective sharing that results in the big breakthroughs.

And even though that's widely known, tech companies have an unfortunate history of trying to stop employees from going to competitors. While non-competes have been ruled out in California, a few years back there was a big scandal over tech companies having illegal handshake agreements not to poach employees from one another. It was a good thing to see the companies fined for such practices.

However, the latest move is to use "trade secrets" claims as way to effectively get the same thing done. The mere threat of lawsuits can stop companies from hiring employees, and can limit an employee's ability to find a new job somewhere else. That should concern us all.

However, in this lawsuit, everything was turned a bit upside down. Part of it was that there did appear to be some outrageous behavior by Levandowski. Part of it was that, frankly, there are few companies out there disliked as much as Uber. It does seem that if it were almost any other company on the planet, many more people would have been rooting against Google as the big incumbent suing a smaller competitor. But, in this case, many many people seemed to be rooting for Google out of a general dislike of Uber itself.

My own fear was that this general idea of "Uber = bad" combined with "Levandowski doing sketchy things" could lead to a bad ruling which would then be used to limit employee mobility in much more sympathetic settings. Thankfully, that seems unlikely to happen. As Sarah Jeong (who's coverage of this case was absolutely worth following) noted, despite all the rhetoric, it wasn't at all clear that Waymo proved its case. Lots of people wanted Google/Waymo to win for emotional reasons, but the legal evidence wasn't clearly there.

And now the case is over. As the trial was set to continue Friday morning, it was announced that the two parties had reached a settlement, in which Uber basically hands over a small chunk of equity to Waymo (less than Waymo first tried to get, but still significant). As Jeong notes in another article, both sides had ample reasons to settle -- but the best reason of all to settle is so that they can focus on just competing in the market, rather than the courtroom and in not setting bad and dangerous precedent concerning employee mobility in an industry where that's vital.

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