Here's what to make of the Uber-Waymo settlement (GOOGL)

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February 12, 2018 3:02 PM

The ride-hailing giant has agreed to give Waymo equity shares worth about $245 million, which equates to .34% of Uber's $72 billion valuation

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Uber has settled its well-known lawsuit with Waymo, Alphabet's self-driving car spinoff,The Wall Street Journal reported.

The ride-hailing giant has agreed to give Waymo equity shares worth about $245 million, which equates to .34% of Uber's $72 billion valuation from its Series G1 funding round. In addition, as part of the agreement, Waymo and Uber engineers will work together to ensure Uber's technologies only reflect the work of its own employees.

This settlement avoids the possibility of a long legal battle after the companies spent four days in US Federal Court in California. The legal dispute centered on Uber's 2016 acquisition of Otto, a self-driving trucking startup founded by Anthony Levandowski, a former engineer from Google's autonomous car project. Waymo said Levandowski conspired with Uber to found Otto and steal some of its autonomous driving trade secrets, a claim that Uber has denied.

The settlement should make it easier for Uber to meet its goal of launching its self-driving cars in its ride-hailing fleet by 2019. CEO Dara Khosrowshahi told Bloomberg last month that Uber aimed to initially deploy autonomous cars in its fleet in confined settings, likely starting in Arizona and Pittsburgh, where the ride-hailing giant is already testing cars. The lawsuit didn't explicitly prevent Uber from hitting this goal, but it did cast a cloud over its self-driving efforts. With the issue in the rear-view mirror, Uber can aggressively test and iterate its self-driving technology stack to ensure it can hit its deadline.

Waymo hopes to launch such a service later this year, while GM is planning a commercial launch of its cars by 2019, and Lyft's open platform could allow it to do so around the same time. That means, if Uber can meet its goal, it will likely be one of the first several companies to deploy autonomous cars as part of a ride-hailing service. That would allow Uber to build an early reputation in the self-driving car space, and afford it a head-start on any logistical kinks that may arise from operating such a service at scale, such as having to repair or insure the cars.

However, it's still unclear exactly how Uber and Waymo will ensure that Uber's technologies reflect its own engineers work. This could possibly involve a third-party auditor appointed by the court overseeing this process, although the companies haven't specified that as an option. Moreover, it's unknown what would happen if Waymo was to find evidence that Uber is in violation of the agreement in any way. Overall, though, it appears Uber is in a better position to move forward with its autonomous driving projects than it was before.

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