Alphabet’s (GOOGL) Waymo made its first acquisition this month, according to Crunchbase data. The company bought British AI startup Latent Logic, which is based in Oxford. Waymo competes with Uber Technologies (UBER) to develop self-driving vehicles for transporting passengers and packages. Waymo and Uber also compete in the ride-hailing market.
Currently, Uber enjoys a huge lead in the US ride-hailing market. The company controls about 70% of the US ride-hailing market, according to Second Measure data. Lyft (LYFT) controls about 30% of the US ride-hailing market. Collectively, Waymo and the other small players control 1.0% of the market.
Waymo started working on self-driving cars in 2009 when it was still part of Google. Today, the company has built self-driving vehicles and launched a self-driving taxi service in Phoenix, Arizona, under the Waymo One brand. The Latent Logic acquisition will likely strengthen Waymo’s self-driving technology.
However, Uber is still struggling to make its self-driving car a reality. Waymo might benefit from Uber’s struggle.
Uber might license Waymo’s self-driving technology
An expert review of Uber’s self-driving software found that it contains Waymo technology. Currently, Uber’s use of its self-driving software would infringe on Waymo’s intellectual property rights. As a result, Uber has two options to resolve the problem if it wants to build self-driving vehicles. First, Uber would have to redesign its self-driving software. Second, Uber would need to license Waymo’s self-driving technology.
Uber said that redesigning its self-driving software would be expensive and take a long time. Therefore, the easy way out for Uber is to license Waymo’s technology.
Waymo to establish a European hub
Waymo will use the Latent Logic acquisition to set up its first European engineering hub. As Waymo looks to expand in Europe, Uber is struggling in the region. Last month, Uber lost the license to operate its ride-hailing service in London. This week, a German court banned Uber from offering its ride-hailing service in the country.
Alphabet stock has gained 30% in 2019, which makes it one of the best performing big tech stocks this year. Uber and Lyft both went public this year. So far, their stocks have fallen by about 30% and 40%.
Alphabet’s other bets generate minimal revenues
Waymo is one of Alphabet’s other bets. The bets mainly a collection of experimental businesses. The other bets generated $155 million in revenues in the third quarter, which represents less than 0.5% of Alphabet’s total revenues. The other bets made an operating loss of $941 million in the third quarter.