My thoughts exactly. Having read the lawsuit in its entirety, if true the claim by Waymo against Otto/Uber is not only a tale of egregious theft by a rogue former employee, but also an indication of Uber's lack of competence when it comes to self-driving technology.

The following quote from Bloomberg's piece revealing the acquisition shows the panic Uber felt:

“The minute it was clear to us that our friends in Mountain View were going to be getting in the ride-sharing space, we needed to make sure there is an alternative [self-driving car],” says Kalanick. “Because if there is not, we’re not going to have any business.” Developing an autonomous vehicle, he adds, “is basically existential for us.”

This observation understandably led them down the path to acquire Otto, which by all accord would provide much needed technology and legitimacy in this arena. However, their diligence failed to uncover that Otto's progress was completely unrealistic for having been incorporated for just 6 months. One may argue that Otto was meant for the sole purpose of trucking/logistics, but again from the same Bloomberg piece:

"The Otto deal will help; the company makes its own laser detection, or lidar, system, used in many self-driving cars. Kalanick believes that Uber can use the data collected from its app, where human drivers and riders are logging roughly 100 million miles per day, to quickly improve its self-driving mapping and navigation systems. “Nobody has set up software that can reliably drive a car safely without a human,” Kalanick says. “We are focusing on that.”

Is it fair to question the expertise and go-to-market viability of a company that cannot even understand what they are purchasing could not have possibly been stood up from a cold start in 6 months? I think so.

This leads me to revisit Uber's viability as a business that can one day go public, make a profit, and return the unprecedented amount of capital it has raised. While this has been dissected from almost every angle, most opinions have baked in the assumption that eventually Uber will execute seamlessly on the transition to self-driving cars and further entrench the advantage they have created by controlling demand. Well, this lawsuit throws a major wrench into that assumption. From Wired:

"First, it allows plaintiffs to ask the court for an immediate, temporary injunction, giving Waymo the power to shut down Uber’s self-driving truck and car experiments until this is sorted. Second, it lets the accuser seek permanent injunctive relief—complicated legalese for forcing Uber to halt any part of autonomous program dealing with the allegedly swiped lidar. Third, the plaintiff can seize the products of its trade secrets, even before the case is decided. In other words, Google could use this legislation to not only temporarily halt Uber’s progress, but take away its toys."

Safe to say that if these implications play out, Uber will be extremely handicapped in the race to autonomy. Public progress reveals Tesla and Waymo are both further along than most people realize. Were one of them to launch a fleet of self-driving cars offering a ride sharing service (as Waymo plans to by the end of 2017), it would seem they could quickly chip away at Uber's demand advantage by competing on the lower prices afforded by not having drivers.

Timelines and technology costs are always major variables in such nascent areas, but the technology gap for Uber to close becomes that much bigger if this suit goes against them - probably too big a gap for their network of riders, routing expertise, or a group of engineers from Carnegie Mellon to defend against.