Uber Faces a Growing Legal Storm


The NewCo Daily: Today’s Top Stories

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Uber’s troubles deepened yesterday when a judge ruled that the lawsuit brought against the company by Google-owned Waymo should go to trial. Uber wanted to handle the dispute in arbitration instead, which is quicker and quieter. In a separate and more ominous move, the judge asked a federal prosecutor to review the case for possible criminal charges (Business Insider).

Waymo says Uber stole its autonomous-vehicle technology. Normally, disputes over intellectual property and trade secrets are arcane and dull matters, but this one is drawing a spotlight. That’s not only because of the dramatic nature of the charges — that Anthony Levandowski smuggled Google-owned blueprints to Otto, his own self-driving truck startup, which Uber then acquired. It’s also because Uber has built such a powerful reputation for fighting mean that the charges sound pretty plausible.

Uber is already facing a federal investigation into its use of a software tool codenamed “Greyball” that it used to avoid the efforts of local governments to enforce rules. At this point the company has lost so much credibility with the public, the industry, and the government that you’d think it would be ready for an executive housecleaning.

But CEO Travis Kalanick controls the Uber board and seems unlikely to budge. Like another high-level executive under siege in the news, he’s invulnerable — until and unless his closest associates collectively agree that it’s time for him to go.

California’s Economy Models the Road Around Trump

As a distinct economy within the U.S.’s larger economy, California is run pretty much the opposite way from what Trump-era Republicans recommend: It’s got high taxes, lots of regulations, and immigration-friendly policies. It’s also thriving, hugely (Matthew Winkler in Bloomberg).

“California is the chief reason America is the only developed economy to achieve record GDP growth since the financial crisis of 2008 and ensuing global recession,” according to Bloomberg’s new study. “In the stock and bond markets, where investors show no allegiance to political parties, California has outperformed the rest of the U.S. the past five years, especially since the Nov. 9 election.”

People trust the state’s debt not only because it has a disciplined budget and economic growth, but because the Democrats running it have also passed new rules requiring transparency and accountability for issuers of government bonds.

California is a leader in the kind of energy and environmental rules that the Trump administration and its business allies maintain kill jobs and dampen growth. But the clean energy boom is actually driving California’s prosperity, not squashing it. The state has its high-profile tech industry, of course, but it’s also a leader in agriculture, manufacturing, and media.

People used to say that the future starts in California and then the other states catch up. Today, it looks like the rest of the country is falling further behind instead.

How AI Erodes the Apprenticeship Tradition

When artificial intelligence invades the white-collar ranks, the tasks it will eliminate first are most likely to be grunt-work: the cases that newly minted lawyers must look up, the reports that junior accountants must review. These are unlikely to be tasks that anyone will truly regret handing over to a machine-learning algorithm. But Quartz’s Sarah Kessler raises a valuable question about this kind of shift: If we take these entry-level assignments out of the mix, how will entry-level employees get their training?

It’s a question Deloitte CEO Cathy Engelbert is also asking: Her firm is built on an “apprenticeship model” that involves junior workers building up their sense of judgment on the job by working their way up through a series of increasingly demanding assignments. Deloitte is rolling out AI systems that review contracts way faster than human employees. But AI can’t do everything, and the company still needs middle-level human analysts to deal with the harder issues the AI can’t resolve. How will companies fill those middle ranks if AI is handling everything below them?

Maybe AI will help solve that problem, or train people itself. More likely, middle managers will keep finding new kinds of new grunt-work for newbies to cut their teeth on.

An Amazon Distribution Network For Everyone

Think of it as Airbnb but for warehouse and fulfillment logistics. Flexe, a Seattle startup, uses spare space rented from warehouse owners to build a network of storage locations. Beginning Monday, it will start offering customers overnight ground delivery to most U.S. locations (Spencer Soper in Bloomberg).

This means smaller companies can tap into a storage-and-shipping network that’s beginning to rival Amazon’s. Flexe already has 25 million square feet of storage, about a quarter of Amazon’ capacity, according to Bloomberg. Its clients — like online mattress seller Casper — like serving customers on their own websites and delivering goods in their own packages.

Just as proprietary platforms in the software world often give way to anyone-can-play open services, a similar dynamic could be at work in brick-and-mortar business as well once you layer on a little digital intelligence. Using existing warehouses more efficiently by renting their excess capacity makes a lot of sense — right up until the holiday season, which will test for Flexe’s model.

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