Uber Technology Inc. said on Monday that Alphabet’s executive David Drummond left the self-riding company’s board given that competence between the parties has increased.
Uber is venturing into self-driving cars, while Alphabet is getting involved in an app that lets people in San Francisco share drives. Alphabet is the parent company of Google and the frictions between Uber and Alphabet, which started as partners, made David Drummond, a longtime executive in Alphabet and director at Uber’s board, to step down from the ride-hailing company’s board. He had been a member of Uber’s executive board for the last three years.
Mr. Drummond, 53, said in an e-mail he left Uber’s board of directors given the overlap between the two companies. Drummond led corporate developments and investment initiatives at Alphabet —a company that gives ambitious projects the resources to make their ideas a reality— and was essential in helping Uber in 2013 secure a $258 million investment from Google Venture’s (GV) capital arm.
The company does not have any plans to fill the seat of Drummond on the board. The latter has been reduced to seven members, including media magnate Arianna Huffington, investor Bill Gurley, and Yasir Al Rumayyan, managing director of the Saudi sovereign-wealth fund. David Krane remains a board observer, who is the head of Alphabet investment arm G.V.
David Drummond joined Alphabet’s Google in 2002, and he is now chairman of its investment arms. His exit from Uber’s board is enough evidence to prove that the two companies are overlapping their interests on the market. Uber and Alphabet started as allies linked through financial ties and different visions to remake the world with technology.
Uber CEO Travis Kalanick said in a statement that Mr. Drummond had been a wise advisor and a great friend. Kalanick wished Drummond and Alphabet the best and added he looks forward to continuing cooperation and partnership between the two companies.
Uber vs Google: a race on self-driving cars, deliveries, and shared rides
The signs of rivalry between Uber and Alphabet cannot be ignored. Last week, the ride-hailing company announced it had spent nearly $700 million to acquire Ottomotto LLC. The latter is a 90-person start-up made of former Google and Carnegie Mellon University engineers who are working exclusively on self-driving vehicles, meaning that Uber is now competing with Google, the first company to venture on autonomous vehicle technology.
San Francisco-based Uber will begin testing self-driving taxis in Pittsburg using Otto’s technology. But Alphabet will not get behind and according to the Wall Street Journal, people familiar with the matter said Google is considering testing its self-driving cars as part of a ride-hailing service of its own.
Uber has long used Google Maps and now the company is working to build its own mapping technology in an attempt to decrease Uber’s reliance on Google. Alphabet, in return, is testing a feature in its popular traffic app Waze, that has led about 65 thousand San Francisco area workers to share rides.
These efforts have caused consternation among executives at Uber, according to The New York Times, including Mr. Kalanick. Uber’s CEO said in a recent interview that Google’s focus on the area of shared drives gave him reasons to worry and work harder on his own company’s efforts.
The two companies are also competing in package and food delivery, including the UberRush courier service and Google Express same-day delivery from stores. Still, both companies continue to work together. Uber pays Google to include its ride-sharing service as a transportation option. But apparently, this alliance will end when Uber finishes its own mapping app.
According to The Information, Mr. Drummond has been prohibited from attending some director meetings and from learning certain strategic company secrets given his role at Google. Drummond denied certain sensitive information about Uber’s strategic initiatives.
David Drummond leaving Uber’s board is a Deja-vu
Mr. Drummond leaving Uber’s board due to competition between the companies he was representing is similar to what executive Eric Schmidt did in 2009. At the time, Mr. Schmidt was the CEO of Google and had to resign to Apple Inc.’s board because Google had been developing products that were competing with Apple, including Android OS and other operating systems for computers.
Regarding Uber losses, the company is facing financial struggles since 2015, and in the first half of 2016, it reported losses of $1.27 billion. The shared ride business was forced to sell its assets in China after failing to keep up with its Chinese competitor.
In the U.S., the presence of another competitor, Lyft, is making Uber give more subsidies to its drivers to keep low prices. If Google joins the race in the U.S., Uber could lose its high position in the market. There is no way to confirm if Drummond’s departure has something to do with Uber’s recent financial losses, yet.
Source: The Wall Street Journal