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Uber and Google's Partnership Becomes Pricklier

Uber and Google's Partnership Becomes Pricklier

By Mike Isaac, The New York Times | Updated: 9 February 2015 10:08 IST

When Google's venture capital arm poured more than $250 million (roughly Rs. 1,526 crores) into Uber in 2013, it looked like a match made in tech heaven.

Google, with billions of dollars in the bank and house-by-house maps of most of the planet, seemed like the perfect partner for Uber, the hugely popular ride-hailing service.

Bliss between the Internet titan and the hot young company, however, has proved fleeting.

Uber recently announced plans to develop self-driving cars, a longtime pet project at Google. It is also adding engineers who are experts on mapping technology. And the company, based in San Francisco, also has been in talks with Google's advertising archrival, Facebook, to find ways to work together.

Not to be outdone, Google has been experimenting with a ride-sharing app similar to Uber's, according to Bloomberg. And both companies have long toyed with the idea of offering same-day delivery of items like groceries and other staples.

Add it all up and the business partners, just two years after that major investment, are "going to war," as the Bloomberg report put it.

Strong words. But they are more of a forecast than a statement on the current relationship between the companies.

Business partnerships tend not to stay harmonious in Silicon Valley. The need to keep getting bigger and a constant fear of being outflanked by the competition can mean partners one day are competitors the next.

And sometimes, they can be a little bit of both. It was Microsoft, after all, that invested in Apple when Steve Jobs returned to the company in 1997, when it was in serious trouble. And Apple and Google, bitter competitors for mobile computing software, still cooperate in several businesses.

The relationship between Google and Apple, in fact, serves as a lesson for Uber. Eric Schmidt, Google's executive chairman, once sat on Apple's board of directors.

But the friendship dissolved after it became clear that Google was working on Android, a direct competitor to the iOS software that runs Apple's phones and tablets. Jobs flew into a rage when he discovered Google's plans, according to a biography of Jobs by Walter Isaacson. Schmidt left Apple's board in 2009.

Still, much as executives at the company might like to do so, Apple - which still allows Google apps like Maps, Search and the Chrome browser on the iPhone - cannot completely decouple itself from Google without damaging its own business. And vice versa.

The same could be said for Uber and Google. Certainly, one day they could both be leaders in the self-driving car business. But for now, they are not only stuck with each other - they also need each other.

"It's a good example of 'co-opetition,'" said Jonathan Zittrain, law professor and co-founder of the Berkman Center for Internet & Society at Harvard University.

Uber is just 6 years old, but it wants to be far more than a ride-hailing service: The company sees itself as a logistics platform, a conduit for delivery of anything to anywhere.

Right now, this is hardly Google's stamping ground. The company makes billions on its advertising products, but has done only pilot tests of delivery projects like Google Shopping Express, which lets customers order items from stores like Costco or Staples for same-day delivery directly to their doorstep.

Indeed, Uber and Google have played down their overlaps.

"We've got a wide-ranging partnership with Google," Jeff Holden, Uber's chief product officer, said in an interview last week. "We're incorporated with Google Maps, for example."

But look five years or so down the road - which is about when people think there will be significant tests of self-driving cars - and all bets are off.

While Uber's app now relies heavily on Google Maps, the company is also hiring its own engineers for mapping research, according to a person familiar with the matter, who spoke on condition of anonymity because of continuing ties to the company.

Google, for its part, is putting millions of dollars into Google Shopping Express, company executives have said. It is a plan that, if it works, could bolster advertising for product searches: If users go to Google's home page to search for products, the company could sell more ads against those searches.

That is, if companies like Amazon, several smaller outfits and even Uber do not get in the way.

And then there is Google's car-pooling app. Google is testing a version of the smartphone app with its employees, according to people briefed on the matter.

Bloomberg Business, which first reported on the app, said that Google would soon introduce a direct Uber competitor. Others familiar with the matter played down Google's interest in ride-sharing.

Regardless, the app, experimental or not, has rankled top Uber employees, according to people close to the company. And it raises the question of whether Google will compete directly with Uber.

If it does, that would put David Drummond, Google's chief legal officer and an Uber board member, in a similar situation to the one faced by Schmidt on Apple's board.

Companies do not just compete for customers and dollars, of course. They also compete for talent.

Uber is building its center for safety, mapping and autonomous vehicle research in a partnership with Carnegie Mellon University, which is considered one of the top campuses in the world for robotics research. The Pittsburgh university also happens to be where several of Google's leading autonomous-driving researchers came from.

Google declined to comment directly on potential competition with Uber. But Uber was quick to emphasize the positive ties between the two companies.

"Uber has a strong relationship with Google and greatly values working closely with David Drummond," said Nairi Hourdajian, an Uber spokeswoman. "We look forward to continuing our collaborative dialogue with Google about the future of our partnership in the years to come."

Still, Uber is hedging its bets.

Uber and Facebook are considering ways to combine Uber's car service with the Facebook Messenger app, according to two people familiar with the matter. The partnership, which was first reported by the tech website ReCode, is similar to what Asian messaging apps like WeChat have done with ride-hailing startups such as Didi Dache. Facebook declined to comment.

It would take years for most of these projects to pan out. And catching up to Google's expertise with maps would be tough. Apple offers another lesson: The company tried replacing Google's mapping power, which supported the Maps app on the iPhone, with a system it developed itself. Users didn't like it. Months later, Google released its own Maps app for the iPhone.

For young companies, even one as well-funded as Uber, dancing with giants is a part of doing business - even if there's always a risk you'll get squashed.

"There are some hard lessons about the dangers of cooperation that are strongly in the memories of these companies," said John Morgan, professor of business administration at the University of California, Berkeley. "Something that makes partnering harder, even when it might make economic sense to do so."

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