Google, Uber on collision course

Two tech companies appear to be heading for a pretty big collision in the future of transportation: Google and Uber.

Racing to win the future of transportation, two companies appear to be heading for a pretty big collision: Google and Uber.

Both firms appear to be crossing into each other's territory. Uber on Monday announced a partnership with Carnegie Mellon that could enable it to get into driverless cars - a major project in development at Google. And Bloomberg News reported this week that Google is preparing its own ride-hailing service. That bit of news raised eyebrows in Silicon Valley because Google is a big investor in Uber and one of its top executives sits on the ride-sharing company's board of directors.

But if the two tech companies are going to go at it in this space, it won't exactly be a fair fight.

Uber already depends on Google's tech, using Google Maps to help drivers navigate. And Uber's business model is much more easily replicated - as evidenced by the hoard of competitors, including Lyft and SideCar, which run essentially the same business. Creating a working driverless car is much harder.

Google's research into the development of self-driving cars also has the potential to upend Uber and its peers just as they upturned the taxi industry.

When there's no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle.

Travis Kalanick, Uber chief executive

The majority of an Uber riders' fare currently goes to the driver - the company just takes a cut off the top. Imagine a world in which the company owned a fleet of self-driving vehicles instead - paying only for the vehicles and their maintenance.

Uber chief executive Travis Kalanick certainly has.

"The reason Uber could be expensive is because you're not just paying for the car - you're paying for the other dude in the car," Kalanick said at the Code Conference last year. "When there's no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle."

But Uber, which declined to comment for this article, is just starting to invest in that future. On Monday, the company announced that it is partnering with Carnegie Mellon University to create the "Uber Advanced Technologies Center," which will "focus on the development of key long-term technologies that advance Uber's mission."

Google, on the other hand, is years into researching driverless cars - first modifying a Toyota Prius and now creating its own prototypes. That gives it a healthy head start over competitors that are preparing to enter the autonomous vehicle race - not to mention its considerable advantage as one of the largest and well-heeled tech companies in the world. Google declined to comment for this story.

Uber also may find it more difficult to navigate the legal headaches associated with getting self-driving cars on the road. The company has a notoriously tense relationship with many cities and state governments due to its tendency to launch services without asking permission first. Uber brought on former Obama campaign adviser David Plouffe to help wage a multi-front campaign for its services last year and has tried to curry goodwill by offering to share some of its rider data with cities to some success.

But Uber's lobbying efforts are no match for Google's prowess in the policy space. The search giant is among the top lobbying spenders in the country and has a sophisticated approach to getting its way with those in power, at both the federal and the state levels. Four states and the District have regulatory approaches in place to support the testing of autonomous vehicles.

Google and Uber have long been intertwined: The tech giant's venture-capital arm, Google Ventures, invested more than $250 million in Uber in 2013, and Google's chief legal officer David Drummond sits on Uber's board of directors.

Many observers assumed Google's initial investment in Uber signaled that it might at some point acquire the company - much as Google Ventures investments in Nest previewed the company's $3.2 billion purchase of the company. But Uber's skyrocketing valuation, above $40 billion in December of last year, may have made it a less attractive candidate for a take-over.

It was Drummond who alerted Uber to Google's possible interest in starting up its own service, according to Bloomberg. Now, the board is reportedly weighing whether to remove Drummond - a situation that bears striking resemblance to when Google chief executive Eric Schmidt resigned from Apple's board while the two companies waged a battle for control over the smartphone market.

But Uber is no Apple. If Google takes on the ride-sharing space with its driverless car tech in tow, Uber may find itself spinning out.