Many comments saying Waymo could easily spin up an Uber-replacement app are missing one key point: integrating with Uber allows Waymo to have a slow rollout / soft-launch.
They can start adding support one city at a time. And for the Uber user, the Waymo option only pops up for you if the ride you requested is within the Waymo range and they have cars available.
This way they can also collect tons of data about how users respond to the offers, affinity to driverless cars per region, price elasticity, etc. And then dial the supply up or down as they wish. They can even start covering a city with just two cars if they wanted to, and then build popularity and word of mouth.
On the other hand if they started with their own app, the lack of car coverage in most areas (due to low car supply, pending regulations, etc) would quickly frustrate users who would then switch to another app, so user retention would be a nightmare.
Not to mention side-stepping all the customer-facing operations of running such a business, which Alphabet does not have an affinity for.
I think my confusion is more about Uber’s incentives here. They’re providing a ramp-up platform for Waymo as you described, but as soon as it hits any scale Waymo can easily part ways.
Uber gets to introduce driverless cars finally (an old promise of theirs) without the costs of owning or developing hardware, and use that as leverage over drivers.
I don't think Uber has anything to fear from Waymo:
(1) It will take years for Waymo to ramp up to "independence" scale. How many cars do they have now, and how many would they need? How long will it take them to negotiate new regulations with every city and state? 5 years?
(2) This deal is probably not exclusive. Uber can strike a similar deal with Cruise as well. Uber becomes the Amazon of driving services, a platform gating access, with all the data.
(3) Having a big money company behind them is good. And if Waymo acquires Uber in 3 years, it's not necessarily a bad thing for Uber.
Waymo maybe could have gone with Lyft (or built their own app) if the deal with Uber fell through, which is probably why Uber accepted it. It's not "help Waymo get to market or not," it's "help Waymo get to market or risk somebody else (or Waymo themselves) passing on Waymo's value to customers and taking the market." Especially with the chance that Uber might get to play gatekeeper in the future, it's a hard deal to turn down.
They can start adding support one city at a time. And for the Uber user, the Waymo option only pops up for you if the ride you requested is within the Waymo range and they have cars available.
This way they can also collect tons of data about how users respond to the offers, affinity to driverless cars per region, price elasticity, etc. And then dial the supply up or down as they wish. They can even start covering a city with just two cars if they wanted to, and then build popularity and word of mouth.
On the other hand if they started with their own app, the lack of car coverage in most areas (due to low car supply, pending regulations, etc) would quickly frustrate users who would then switch to another app, so user retention would be a nightmare.
Not to mention side-stepping all the customer-facing operations of running such a business, which Alphabet does not have an affinity for.