Google's self-driving car will be hitting the road soon, as a full-blown for-profit independent company under Google's new umbrella company, Alphabet.

The evolution of Google's self-driving car will take a step up in 2016, as Alphabet seeks to compete with Uber through its own self-driving version of a ride-sharing service.

According to a Bloomberg report on Wednesday, citing an anonymous source "briefed on the company's strategy," next year Google will begin launching a ride-for-hire service based on its autonomous fleet in some of the areas where its been testing its self-driving cars the most: San Francisco and Austin, Texas.

Reportedly, Google will start small by deploying the first autonomous cars, including a range of small and large vehicles, in confined areas like military bases, industrial office parks and college campuses. Google did not officially comment on the report.

The ostensible launch plans represent an evolution in the development of Google's self-driving cars -- from the first heavily outfitted sedans driven by Google engineers to its cute steering wheel-less Car Pods used for small public demonstrations, to a full-on, open to the public robot taxi service.

The plans also represent the first direct competition between the Silicon Valley giant and billion-dollar unicorn startup, Uber.

Uber, in which Google Ventures has previously invested hundreds of millions of dollars, dominates the ride-for-hire business in the U.S. In fact, Uber's 1.1 million active drivers can reach about 75 percent of the U.S. population, according to The Verge.

But as Uber has grown in its core business and, this year, dove in to its own development of self-driving technology by poaching some 40 of the top autonomous vehicle experts from Carnegie Mellon University, Google clearly has a huge built-up lead in the race for self-driving cars. Google's driverless cars have logged more than 1 million miles on the open road since testing began in 2009.

Google -- and the concept of self-driving cars, in general -- still has obstacles to overcome before its autonomous fleet is allowed to cart the general public around for a fee. And it appears the biggest hurdle for Google in 2016 won't center on the technology, the business model, public trust, safety or competition from Uber.

It comes from government. Though Google's autonomous vehicles have been driving (themselves) on the roads of California for years, the Golden State proposed a huge potential snag to Google's plans for an autonomous ride-sharing service on the same day those plans were leaked by Bloomberg.

As the New York Times reported, the California Department of Motor Vehicles issued a draft proposal for regulations on autonomous vehicles on Wednesday. The proposal would mandate safety tests, three-year permits, and data security and accident reporting standards for autonomous vehicles, likely a matter of course for Google. But the California D.M.V. also proposed a requirement that every autonomous car be operated by a licensed driver who would be responsible for taking control of the vehicle if necessary and would also be legally responsible for any traffic violations the vehicle committed.

There are two major problems Google faces with the potential regulations. First, its latest pod-like autonomous vehicle prototype simply isn't manufactured with any of the equipment that the California D.M.V.'s proposed "licensed driver" mandate would require in practice, in order to take responsibility over the car's operation. As Latin Post previously noted, Google's latest driverless vehicle has no steering wheel, no gearshift, and no breaks or acceleration pedals. They operate with a touchscreen and a single shutdown panic button.

But the bigger problem is that the draft regulations would obviate the point of Google's plans -- to cut out the extra overhead of paying actual drivers to operate ride-sharing services like Uber. Having to have a person behind the wheel (even if they don't ever touch it) precludes the fundamental basis of Google's rumored autonomous ride-sharing service.

"Safety is our highest priority and primary motivator as we do this," said a Google spokesperson to the Times in response to California's D.M.V. proposal. "We're gravely disappointed that California is already writing a ceiling on the potential for fully self-driving cars to help all of us who live here."

There's still a bright side for Google, though. As Wired reported, Google's other testing ground, Austin, Texas, hasn't proposed any restrictions on autonomous cars so far -- and South By South West 2016 would be a great time and place to show off the future of transportation.