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How Much Longer Will Google & Uber's Partnership Last?

Written By Brian Hicks

Posted February 10, 2015

The two tech giants used to be best buds.

Google’s (NASDAQ: GOOG) venture capital arm invested more than $250 million in the ride-sharing app company back when it was making a name for itself in 2013.

Google’s numerous resources — including house-to-house maps of most of the planet — and Uber’s rapidly growing network of drivers and passengers was a match made in tech-heaven… for a while.

Of course, Uber had more to gain at the beginning of their partnership, but now that both companies are staring down a more even playing field, their relationship has deteriorated to a shaky alliance.

Both companies are said to be working on products meant to compete with the other’s.

Uber recently announced plans to develop self-driving cars, a well-known initiative at Google for some time. While this is hardly Google territory, as the company makes billions in advertising, it should still be regarded as firing a round over Google’s broadside.

Uber is also hiring engineers to design mapping tech that is meant to replace Google Maps within the Uber app.

Uber has even been in talks with Google’s advertising nemesis, Facebook (NASDAQ: FB), searching for avenues of collaboration.

Not to be outdone, Google tried its hand at a ride-hailing app comparable to the Uber app, and both companies have long considered the idea of creating a delivery service of food and similar wares.

However, Google has done only pilot tests of delivery projects like Google Shopping Express, which lets customers order items from stores like Costco (NASDAQ: COST) or Staples (NASDAQ: SPLS) for same-day delivery directly to their doorstep.

Pressure & Time

Two years after Google’s major investment in the San Francisco-based start-up, old friends are headed directly for future conflict, as the potential overlap of both companies is primarily limited to products in development.

The type of progression is more reflective of the industry that the two companies occupy rather than the minds behind the companies themselves. Business partnerships tend to get rocky over time in Silicon Valley.

The tech sector’s grow-or-die mentality, along with the constant threat of irrelevance, can result in companies being partners one day and rivals the next — which is not to say that those two relationships are mutually exclusive.

First, it was Microsoft (NASDAQ: MSFT) that invested in Apple (NASDAQ: AAPL) back in 1997 after Steve Jobs’ return to the then-flagging company.

Now, Apple and Google cooperate where their products overlap for the sake of their user bases despite being bitter rivals within the mobile computing sector.

Their relationship serves as a model for future collaborations between companies that have failed to gain autonomy within their industry. As much as the Apple higher-ups would love to discontinue any Google-made apps such as Search, Maps, and Chrome on their products including the ubiquitous iPhone, neither company can completely extricate itself from the other without risking damage to its own business.

The same could be said for Uber and Google. For all we know, we might be looking at the future leaders of the self-driving car industry, but for now, they need each other. Think of it as a little healthy “co-opetition.”

Beyond the Horizon

Uber hasn’t yet has its sixth birthday, but it knows it doesn’t want to be just a highly successful ride-hailing service. It fancies itself a logistics platform and a conduit for delivery of anything to anywhere.

But before that happens, it wants to debut its own map service, which will pave the way for Uber’s serious venture into self-driving cars, unlike Google’s more casual interest in its own ride-sharing app.

The app, casual or not, has been on Uber’s radar, and it raises the question of when Google will compete directly with Uber. Five years down the road, when self-driving cars are well advanced in their testing stages, it’s anyone’s game.

As mentioned earlier, Uber and Facebook are searching for avenues of collaboration. They’ve settled on combining Uber’s carpooling app with the Facebook Messenger app in a similar fashion to what Asian messaging apps like WeChat, part of Tencent Holdings (OTC: TCEHY), have done with ride-hailing start-ups such as Didi Dache.

No matter the implications of these proposed efforts, it’s going to take years for most of these projects to take form.

For growing companies — even one growing as quickly as Uber — walking with titans is a part of the regular day to day, even if there always is a risk of getting crushed.