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Google is one step closer to making money off self-driving cars

Steve Mahan, who is blind, stands by the Waymo driverless car during a Google event on Dec. 13 in San Francisco. The self-driving car project that Google started seven years ago has grown into a company called Waymo. (Eric Risberg/AP)

Google’s long-running project to create technology for self-driving cars has been spun off into its own company, executives announced Tuesday, a sign that the Internet behemoth now plans to turn its years of research into a moneymaking enterprise.

The new entity will be called Waymo, a play on “a new way forward in mobility,” and operate as an independent entity under Alphabet’s corporate umbrella. Alphabet is the Google parent company that executives established last year to distinguish the core search engine business from its more experimental ventures.

The decision to create Waymo now, after developing the self-driving technology for the past seven years, indicates that executives believe the technology is moving from a distant ambition to something that may soon be ready for market. Just how soon, however, they were too coy to say.

“What you’re feeling from the Waymo team is confidence that we’re close to bringing this to a lot of people,” said John Krafcik, the chief executive of the self-driving car project. “We’ve sort of reached an inflection point in the technology and in our experience.” 

Spinning off its more mature projects into separate companies allows Alphabet to isolate its core business, still called Google, from newer ventures that might drain resources without adding much in terms of revenue. It also means those projects must stand on their own, out from behind the sizable profits that the company’s digital advertising business rakes in each quarter.

When CEO Larry Page created Alphabet last year, he wrote in an open letter that the decision was driven by the need for both accountability and innovation. While the company makes bold bets on ideas that may never materialize, and sees that experimentation as key to its business, it also wants to commercialize those ideas that have the most promise.

Alphabet has faced scrutiny from shareholders who want to be sure its research projects actually lead to revenue. The company hired Ruth Porat, a former Morgan Stanley executive, last year to serve as chief financial officer, and analysts have credited her with bringing more fiscal discipline to the company, my colleague Hayley Tsukayama wrote in July.

So far, the company’s spinoffs have had lackluster results. Google Fiber, a high-speed Internet business, announced in October it would scale back plans to expand and cut a significant portion of its staff. Nest, a home automation company, has encountered technical issues with some of its products and suffered from hitches in the larger smart home market.

Waymo will face plenty of its own challenges. There is already fierce competition in the self-driving technology market from the likes of Tesla and Uber, not to mention traditional automakers that have made investments in the space. The company will contend with regulations that preclude its cars from taking to the road in many states and cities.

Engineers explained at an event Tuesday that Google’s self-driving technology has grown less dependent on human intervention since it was first conceived in 2009. The software began by operating cars on closed courses and predetermined routes, before gradually gaining more autonomy.

The technology today is capable of identifying people and objects that the car encounters, such as a pedestrian, cyclist, fire hydrant or other automobile. The software then makes a prediction about what movements those entities are likely to make and how the car should respond accordingly, said Dmitri Dolgov, head of self-driving technology.

For example, it can distinguished between a person simply standing on the side of the road and one preparing to cross the street. It can detect when a parked car has its door open, indicating a person may soon exit, and when a police car approaches from behind with flashing lights, Dolgov said.

That development culminated in October with a non-employee traveling solo for the first time in a fully automated Google car. There was no steering wheel, no gas pedal and no brake. The passenger, Steve Mahan, is legally blind, and has helped Google test its self-driving technology for several years.

“I’m looking forward to when these vehicles are commercially available because they will change the life prospect for persons such as myself,” Mahan said Tuesday.

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