Amazon has agreed to acquire self-driving start-up Zoox for USD $1.2 billion (£975 million). This represents Amazon’s joint second largest purchase ever along with Zappos (shoes) and Ring (video doorbells) – Amazon’s largest purchase was Whole Foods for 13.7 billion in 2017. Although this sounds like a large win for Zoox, it’s worth noting that this total is roughly a third of its most recent valuation (USD $3.2 billion), and not much more than Zoox has received in total funding.
Zoox’s approach differs from those of other self-driving vehicle companies in that its focus is on developing a self-driving “robot taxi” from the ground up, whereas most other self-driving vehicle companies are developing systems that can be integrated with existing vehicles. The advantage of Zoox’s approach is that they can design the vehicle specifically for self-driving. For example, because a self-driving car doesn’t have a driver, there is no need to have a “driver’s seat”, which means there is no need to have a “front” and a “back” – in other words, Zoox’s car is symmetrical and bidirectional, with four inwardly facing seats.
So, why has Amazon purchased Zoox? Well, Amazon is essentially a logistics company – its biggest challenge is getting packages to consumers as quickly and as cheaply as possible. Zoox’s primary focus has been in developing a vehicle for transporting people, but that technology is no doubt equally applicable to the transport of goods. Zoox’s self-driving technology will remove the need to have a driver in a delivery vehicle and, in combination with Rivian’s electric vehicle technology (another of Amazon’s recent purchases), will likely result in a significant reduction in delivery costs.
Not only will Amazon gain the benefit of Zoox’s technology, it will also gain the benefit of a relatively large patent portfolio (of over 150 patents and patent applications). Given there are some (very) big players in the space (think Uber, Google, Toyota, GM etc.), all with significant driverless vehicle patent portfolios, Zoox’s patent portfolio will be valuable to Amazon as bargaining power in the face of any alleged patent infringement. This is, of course, in addition to the monopoly such patents will provide and the potential to use those patents as income generators by licensing those patents to companies that don’t necessarily compete with Amazon (for example, in the ride sharing space).
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