Uber’s new CEO may have to divest his shares in UberFreight competitor Convoy

Dara Khosrowshahi may need to divest his shares in freight startup Convoy if he accepts the CEO role at Uber. As of May 2017, the ride-hail company launched a competing freight service, called UberFreight, that matched truckers with payloads through an app.

The Expedia CEO, who was the Uber board’s choice to replace Travis Kalanick, invested in Convoy during the $2.5 million seed round, along with Jeff Bezos and Khosrowshahi’s cousins, Ali and Hadi Partovi.

It’s not a major sum, especially relative to the more than $80 million the company has raised. Still, UberFreight could present a real threat to Convoy’s business or vice versa.

Khosrowshahi has been vocal about his support for Convoy — often tweeting about milestones the company hit over the past few years.

Uber co-founder and board member Garrett Camp, also an early investor in Convoy, divested his shares in the company in June. At the very least, that sets a precedent for Khosrowshahi.

Khosrowshahi’s continued involvement in an UberFreight competitor would present a clear conflict of interest.

Founded in 2015, Convoy recently raised a $60 million round led by Y Combinator in July. While Khosrowshahi hasn’t supplemented his initial investment since the seed round, both Partovi brothers participated in this latest cash infusion.

The idea for UberFreight was born out of the company’s acquisition of self-driving trucking startup Otto. When Uber bought Otto for $680 million in August 2016, the six-month-old startup was already working on its platform for truckers. The plan was to build out and launch the logistics platform that matches truckers with payloads, and eventually have the self-driving trucks run on that platform when the technology was ready.

Uber has raised nearly $13 billion in funding, and was most recently valued at $69 billion.

But Convoy still has some advantages over UberFreight. In addition to two years worth of lead time and major relationships, like its four-year agreement with Unilever, Convoy also has the benefit of not being marred by a messy legal battle.

Uber’s acquisition of Otto came under fire starting in February 2017. Alphabet claims that Otto co-founder Anthony Levandowski stole the design for a key self-driving sensor and brought it to Uber. The ride-hail company disputes that these designs ever made it to company. But the lawsuit was a cause for concern throughout the process of finding a replacement for Kalanick.

Khosrowshahi, who spent seven years at investment bank Allen & Co., has been described as an adept dealmaker with a willingness to invest significant sums of money in the short term for high returns in the long run. Under Khoswrowshahi, Expedia acquired Trivago, Travelocity, Orbitz and Airbnb competitor HomeAway, among others.

There is a chance, then, that Convoy could become an attractive acquisition target for Uber down the line.

Uber declined to comment for this story. We’ve reached out to Convoy and Garrett Camp for comment, and will update when we hear back.

This article originally appeared on Recode.net.

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