Uber’s Long Drive Into Google’s Self-Driving Moonshot

Google just reorganized its entire corporate structure, putting the business “Google” we all know into a bigger company, Alphabet, which will be the holding company of a number of other Google business lines and projects. Some observers have remarked that this will instill more discipline within all of Google’s famous “Moonshot projects” to be judged somewhat independently under Alphabet’s CEO Larry Page’s watchful eye. Certainly, on paper, it sounds like a more logical structure with which to manage a growing behemoth like Google and all of those Google X and moonshot projects.

I don’t know all the moonshots are, but my first reaction in hearing the news was to think about Uber (where Google invested) and the specter of self-driving cars. I had figured out of all of its moonshots, self-driving technologies may be the one that’s ready for a huge market next. Uber’s rise in part was made possible by leveraging Google’s mobile platform (Android), and across platforms, by leveraging Google’s Maps product and API. Now, as Uber is growing like a weed all over the world, could it be that Uber, just a few years ago considered a “startup,” have taken investment from Google and, in that time, wedged into the most market-ready moonshot project and built a network on top of it (leveraging Google Maps, to boot)?

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As I was saying, I don’t know what all the moonshot projects are, but luckily someone sleuthed this and came to an interesting conclusion: That Google X moonshot projects very much have a mixed record. The USA Today’s Jessica Guynn wrote a piece with the headline “Google’s Mixed Record On Moonshots Means Alphabet Could Flunk,” revealing some long-term concerns about the likelihood of a second act as elegant as PageRank. Guynn writes:

Google has been under pressure to look to the future and to the next big moneymaker. The Internet giant relies on its main advertising business which makes nearly 90% of the company’s total revenue. That business is still growing, but it’s growing more slowly — and it’s facing rising competition from Facebook and others.(Google shares closed up 4% to $660.78 on Tuesday as Wall Street digested the Alphabet news.)

When Guynn wrote that Google “relies” on its search advertising business, it reminded me of an old post by Chris Dixon, who asked “What’s Strategic For Google?,” making his point succinctly:

Google makes 99% of their revenue selling text ads for things like airplane tickets, dvd players, and malpractice lawyers. A project is strategic for Google if it affects what sits between the person clicking on an ad and the company paying for the ad…At each layer, Google either wants to dominate it or commoditize it.

If something is strategic to Google, he argues, they have strong incentives to dominate it or let it get commoditized. But, that’s for their core business, and even though the stock has been surging this summer, the best tech analysts in the word raise valid concerns. Ben Thompson of Stratechery came out with a strong post earlier this year, “Peak Google,” subtly arguing that the company has peaked in its dominance:

Google is quite safe when it comes to search, and that they will be a very profitable company for the foreseeable future. I just suspect we will all think differently about that dominance when it’s a small percentage of total digital advertising, just as we thought differently about IBM’s dominance of mainframes in the age of the PC, or Microsoft’s dominance of PCs in the age of the smartphone.

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If you believe in Peak Google, and if you believe Google will try to dominate whatever is strategic to them, and if you believe that out of all the moonshots in their portfolio, the next one in line will be self-driving technologies, a curious thing may have happened along the way: A little startup from San Francisco may have leveraged Apple’s (then) new mobile platform and Google’s own mapping technologies to create a network within which they could acquire and own the customer relationship (Uber). Eventually, of course, Ubers will be self-driving, and while it may have been logical to assume that technology would’ve been supplied by Google, it now seems like Uber not only doesn’t want a part of that, it’s also that (to a degree) technologies related to autonomous navigation have started to commoditize a bit. This may put Google on the short end of the “dominate or commoditize” framework — after years of doing it to others, Uber’s wedge into their moonshot portfolio might turn around and do it Google.