Will Google and Uber Invade Each Other’s Turf?

Google is working on its own ride-hailing service to compete with Uber, according to a Bloomberg report.

Meanwhile, Uber has announced a strategic partnership with Carnegie Mellon University that will see the creation of the Uber Advanced Technologies Center in Pittsburgh, Pa., that will focus on developing long-term transportation technologies to further Google’s business — which TechCrunch suggests indicates Uber will build its own fleet of autonomous vehicles.

The situation smacks of a soap opera for the autonomous and ride-sharing industries…Google has pumped US$258 million into Uber and has a seat on its board of directors — despite this, executives from both companies have been keeping a wary distance from each other. It’s rumored that Uber might want to push Google off its board, and Google is friending Uber competitor Lyft, by including data from that company in Google now — but ignoring Uber.

Driverless Pot O’Gold

The potential market for autonomous vehicles will be nearly $90 billion by 2030, Lux Research estimates.

Software will account for much of this and will be a key competitive differentiator, Lux suggests.

Google’s strength is software. In addition to offering Android for the connected car, it last year launched Google Automotive Link (GAL), together with an Android Auto SDK.

Furthermore, it has corralled at least 40 auto industry companies as members of the Open Automotive Alliance, which it formed last year.

Cars “are the third most connected medium after smartphones and tablets,” pointed out Praveen Chandrasekar, a research manager at Frost & Sullivan.

Why Google Wants In

“It’s all about data and understanding the movement of people and goods and their behavior, traffic and logistics,” remarked Roger Lanctot, an associate research director at Strategy Analytics.

“Uber is building tremendously powerful reservoirs of data and insight about its drivers, passengers and traffic movements,” Lanctot told the E-Commerce Times, “Google wants in on all of that, and the driverless car angle is a way to play for the long-term payoff.”

Transportation is a data business, Lanctot pointed out. Google “wants in on all aspects of transportation — Uber is stepping all over what Google sees as its turf — ownership of data associated with transportation.”

Google recently teamed up with insurance comparison shopping site Comparenow.com, which gives it access to about 30 insurers, and there’s speculation that it will launch its own auto insurance shopping site soon.

Although Google cites the number of lives that can be saved and injuries that might be avoided by using driverless cars, “there’s no noble intention here,” Chandrasekar suggested. “The more time you have in your car because you’re not driving, the more time you might spend online, meaning the more dollars Google will get from ads.”

Uber’s Reach Exceeding Its Grasp?

Uber might be stepping into a situation it can’t get out of.

“I’ve been thinking about how Uber could apply this commercially since I heard the news, but this seems ridiculously stupid,” Frost’s Chandrasekar told the E-Commerce Times. “Right now, Uber’s model is lean — they don’t have CAPEX or major operational expenses, all they spend on is marketing and advertising.”

Building their own fleet would “completely change their model and goes against what they’re known for, which is providing access to shared products through technology,” Chandrasekar said. “Even Google, with all its money, knows that it’s better to go through partners.”

Google has begun talks with most of the world’s top auto makers and has put together a team of global suppliers for its autonomous car project, Chris Urmson, the director of its self-driving cars project, said at the Automotive World Congress, held mid-January in Detroit.

“At least Uber picked Carnegie Mellon, which is one of the leading universities in the United States for autonomous vehicle research,” Chandrasekar mused.