Waymo, a unit of Alphabet, is set to launch a ride-sharing service similar to Uber, but with no human driver behind the wheel. Officials in Arizona granted Waymo a permit to operate as a transportation network company (TNC) across the state on Janurary 24, following the company’s initial application on Janurary 12, Bloomberg reported.
The imminent release of a robotic fleet of fully autonomous Chrysler Pacifica minivans could be flooding the highways of Arizona, causing major headaches for Uber.
Since April of last year, Waymo has been experimenting with its self-driving fleet on the human guinea pigs of Phoenix, offering residents 24/7 access to the free ridesharing service. TNC status is a significant step for Waymo, because it now authorizes the company to start charging its passengers.
Waymo’s vehicles in the Phoenix area have driven more than 4 million miles on public roads. In November, the company said a portion of its cars in the Phoenix area were operating in fully autonomous mode, what’s known in industry parlance as level four autonomy.
“A fully self-driving fleet can offer new and improved forms of sharing,” Waymo said at the time, adding that in coming months it would invite members of the public to ride in the fully autonomous vehicles, beginning with those already in the early rider program.
“As we continue to test drive our fleet of vehicles in greater Phoenix, we’re taking all the steps necessary to launch our commercial service this year,” a Waymo spokesman said in an emailed statement.
As Quartz notes, driverless cars are widely believed to be the "silver bullet" that will make ride-hailing profitable by eliminating the main cost: wages paid to human drivers.
In the fourth quarter of 2017, Uber paid about $8 billion to drivers in earnings and bonuses, or about 72% of its gross revenue for the quarter. As a result, Uber lost $4.5 billion last year on $7.5BN in net revenue ($37BN gross revenue).
Waymo has yet to discuss driving rates for the Phoenix area, let alone provide plans to operate across other cities in the United States.
The threat from Google could prove existential to Uber: none other than former Uber CEO and co-founder Travis Kalanick said that the evolutionary process of ridesharing will ultimately transition to fully autonomous vehicles.
"The minute it was clear that Google was getting into the ride-sharing space, we realized we needed to make sure there was an alternative, because if there is not, we will be out of business,” Kalanick told Bloomberg in 2016.
As has been widely publicized, the fierce competition between Waymo and Uber to be the first to launch driverless ridesharing grew so intense, that Waymo sued Uber for stealing its trade secrets. On February 9, court found Uber guilty, ruling it would have to pay Waymo hundreds of millions of dollars for trade secrets theft, along with promising not to use the technology in any of its autonomous vehicles.
Quartz describes the fierce competition between Waymo and Uber to launch driverless ridesharing vehicles across the United States:
Arizona granted the TNC permit a week and a half before Waymo commenced its trade secrets trial against Uber in San Francisco, alleging Uber stole Waymo’s knowledge on how to build self-driving cars. The two companies reached a settlement on Feb. 9, five days into the trial, which includes Uber paying Waymo a 0.34% equity stake and agreeing not to incorporate Waymo’s confidential information into its software or hardware. But nothing prevents Waymo from competing in the ride-hailing arena.
Uber’s worst nightmare is almost here.
While Saudi Arabia’s Council of Economic and Development Affairs (CEDA)’s Public Investment Fund (PIF) might have top-ticked the top in Uber’s valuation back in 2016, Waymo’s imminent rollout of its driverless cars for commercial use in Arizona could prick Uber’s valuation and send it into a sharp contraction.
In its rush to preserve market share, Uber will now be forced to roll out driverless vehicles of its own. This could trigger Uber to unleash a tech-induced surge of driver unemployment leading into the Presidential elections of 2020.
Two days ago, we reported a big rollout of burger-flipping robots in California is set to hit 50 locations by 2019; next it could be the part-time driver's turn. And so, as millennials praise the tech leaders in Silicon Valley, they do not realize that AI-controlled robots are coming for their jobs.