The internet is the new car: Google and Uber to start sharing profits next year
Reuters January 20, 2020 10:49:18The Google-Uber partnership will see the world’s largest technology companies share profits from the online search giant’s (GOOGL) share price on an even footing in 2019, according to a filing with the U.S. Securities and Exchange Commission (SEC).
The companies, which also include Microsoft, Apple, Facebook and Google, said they expect to earn between $2.4 billion and $2,890 per share from the deal, with Google making up about 30% of that.
The remaining 20% will come from share price appreciation and share price changes, they said.
The two companies are also expected to make a combined $1.5 billion in additional cash from their own shares, according the filing.
Google, which has an operating margin of about 4%, is likely to make up the bulk of the profit.
It will earn between 70% and 80% of Google’s share price in 2019 on average, depending on how its share price moves in the year, according a Reuters tally of current share prices and projections.
A Google spokesperson declined to comment.
Uber’s spokesman declined to be interviewed.
Uber, which started as a car-hailing service and now serves as the internet’s largest platform for consumers to buy and sell vehicles, has seen its share prices tumble this year.
The stock closed at $25.40 on Monday, down about 5% in late afternoon trading.
The company said last month that it was considering raising prices to boost its profitability.
Uber also said it would share revenue from the partnership with the National Highway Traffic Safety Administration (NHTSA), which oversees vehicle safety and has been criticized for not doing enough to enforce laws against distracted driving.
NHTAS data show that Uber has been fined more than $7.3 billion since 2016 for violating laws against driverless cars, including rules requiring the company to notify drivers when they leave the road in the event of a collision.
Uber is also being investigated for its use of software to allow drivers to record the time of their trips, which can help them avoid tickets.
Uber has also faced scrutiny over its handling of drivers’ complaints, including reports that some drivers were not even paid in the first place.
In September, the company announced that it had suspended thousands of drivers for violating their terms of service, and the company has been forced to recall some vehicles in the past.
The Google/Uber deal will create an incentive for Google to focus on more profitable areas of its business, including autonomous vehicles and Internet-based services, according Bloomberg.
Google and Uber also said they will create a partnership in which they will work together to develop the next generation of driverless technologies.
The partnership will allow Google to better connect the cloud computing services of Google and its own fleet of self-driving cars, they added.