August 7, 2018 / 8:49 PM / 9 days ago

Uber doubles down on freight business

SAN FRANCISCO (Reuters) - Uber Technologies Inc [UBER.UL] is creating a standalone business out of its long-haul trucking business, with plans to double its investment in the unit to drive growth ahead of a much-anticipated initial public offering.

A car with an Uber logo on it drives down the street in New York, U.S., July 27, 2018. REUTERS/Lucas Jackson

Uber said on Tuesday its separate freight business, which connects truckers with shippers, will be led by Lior Ron, a former employee who left the ride-services firm in March. During Ron’s absence, the company negotiated a deal allowing for his return that also gave Uber Freight more flexibility to make acquisitions or strategic investments.

Ron co-founded a self-driving trucking company, called Otto, which Uber acquired in 2016 and later became the centrepiece of a high-stakes lawsuit over trade-secrets theft. Uber settled that lawsuit, brought by Alphabet’s self-driving unit Waymo, in February for $245 million.

As part of Uber’s reorganization, the co-founders and employees of Otto will receive an equity stake in Uber Freight, although Uber declined to provide details on the value of that equity or the number of employees receiving it.

Anthony Levandowski, who co-founded Otto with Ron and was at the centre of Waymo’s trade-secrets theft allegations, also received equity in Freight. But Levandowski, who was fired from Uber last year, is selling his Freight shares to a venture capital firm, Uber said.

Levandowski did not immediately respond to a request for comment.

Ron and Levandowski both previously worked for Alphabet. Levandowski was not a defendant in the Waymo lawsuit but was accused of downloading confidential documents before leaving Waymo. During the case, he asserted his constitutional right against self-incrimination.

Uber said it will double its investment over the next year in Freight, a brokerage service set up in May 2017 for truck drivers and fleet managers looking for cargo to haul across the continental United States. It declined to provide a dollar amount, but said Freight’s growth was promising. The business is doubling the number of loads it connects with truckers every quarter, Uber said.

The company said Freight was a key area of investment leading up to Uber’s initial public offering planned for next year. The U.S. trucking business is a $700-billion industry, but Uber is competing in a crowded and fragmented market.

Uber had taken pains to distance Freight from Otto, saying the two were separate, independent businesses without overlapping products.

There is little left of the company Ron helped to create. Uber last month shut down its self-driving truck unit, long after its autonomous truck testing had ceased.

Reporting by Heather Somerville; Editing by James Dalgleish and Tom Brown

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