Uber Technologies is about to be probed to a degree that would make even the most compliant alien abductee blush. The company is now looking at a minimum of five criminal investigations from the U.S. Justice Department regarding claims of bribes, illicit software usage, unfair marketing practices, corporate espionage, questionable pricing strategies, and theft of a competitor’s intellectual property.
The ride-hailing firm is also involved in dozens of lawsuits from from customers and employees — and one very public suit with autonomous research rival Waymo. But Uber’s skirting of the law was what made it so profitable to begin with. Its take-no-prisoners attitude may have been the thing that ultimately ousted founder and CEO Travis Kalanick and severely tarnished its corporate image, but it’s also an aspect that ensure its success. Still, nobody likes learning how the sausage is made and every look behind Uber’s curtain revealed another fresh horror the press couldn’t resist mentioning — including yours truly.
Reincarnated as a kinder brand, Uber is now headed by Dara Khosrowshahi. The new CEO has told employees not to expect a peaceful 2017 as officials spend the next six months holding the company accountable for its misdeeds. During that time, Uber plans to clean up its image and prepare for its initial public offering sometime between 2019 and 2021.
However, what the company will look like by then is anyone’s guess. A lot of locations have had it with Uber’s behavior and some have even begun banning the service. According to Bloomberg, London has effectively outlawed the service, citing “a lack of corporate responsibility.” One of the touchiest of subjects is the company infamous software, known as Greyball.
Uber claims Greyball was never used within Britain, but London’s transportation authority said its very existence, along with insufficient vetting of drivers and mishandling of criminal offenses, were enough to withhold its private-hire certification. As of September 30th, the company has no legal grounds to operate within London.
Of course, it’s still operating as if nothing happened. The app has not been affected whatsoever by the government’s decision to ban it and a London-based enthusiast verified Uber remained fully functional as of this morning. The ride-hailing firm is attempting to lodge an appeal and convince social media users to take its side. It claims the decision to ban its service would put 40,000 drivers out of work by the decree of “a small number of people who want to restrict consumer choice.”
Skirting the law is a tradition at Uber. Kalanick even set up the company’s legal department with the directive to push the legal envelope as often as possible. And, while the company may be trying to clean up its act, the very nature of its business exists in a gray area of what’s lawful in some regions. Some countries are attempting to regulate the business similarly to taxi companies while others are attempting to ban it outright.
It wasn’t always this way, though. Upon the company’s inception, Uber sought only to hire professionally licensed drivers and adhere to the letter of the law. Things changed after Lyft entered the market with non-professional drivers under contract. Uber’s response was to convince local governments to stop Lyft from breaking the law. When nobody bothered, Kalanick decided it was time for more aggressive tactics and opened hiring up to anyone with a car.
“Uber will roll out ridesharing on its existing platform in any market where the regulators have tacitly approved doing so,” Kalanick said in 2013. The company was forced to deal with some regulatory hurdles but with little to no enforcement, was able to expand. The CEO told employees it was fine to operate anywhere rules weren’t being actively enforced and even had staff book rides with competitors just so they could convince drivers to switch to Uber. By 2014, market analysts were singing the company’s praises and it received a $17 billion valuation.
So can Uber be as successful when it plays by the rules? With the company facing more scrutiny than its peers, we’re likely to find out. In addition to its corporate rebranding, the business is also losing quite a bit of its vintage staff.
Currently, its higher-ranking executives is a mixture of new and old faces but veteran employees continue to abandon ship as the rules of conduct keep shifting. Salle Yoo, Uber’s longtime legal chief will soon leave the company for this very reason. Yoo admitted to being on board with Kalanick’s vision. “I tell my team, ‘We’re not here to solve legal problems. We’re here to solve business problems. Legal is our tool,’” she explained on the Legal Talk Network earlier this year. “I am going to be supportive of innovation.”
Two innovations recently made public include Uber’s Surfcam and Firehouse software. Surfcam is named after the webcams that help surfers identify the best times to hit the waves. It uses scraped data published online by competitors to figure out how many drivers were on their systems and where they were, thereby allowing the company to predict when there is a “swell” of competition. Meanwhile, Firehouse allowed Uber to charge passengers a fixed rate that was partly reliant on computer-generated assumptions of what people traveling on a particular route would be willing to pay.
While neither program is likely to be considered as nefarious as Uber’s Grayball and Hell software, both of which operate on the very fringes of what is legal. As a result, authorities may have to “get creative” in order to effectively prosecute the company, said Yochai Benkler, co-director of Harvard University’s Berkman Klein Center for Internet and Society.
“There are real political risks for playing the bad guy, and it looks like they overplayed their hand in ways that were stupid or ultimately counterproductive,” Benkler told Bloomberg. “Maybe they’ll bounce back and survive it, but they’ve given competitors an opening.”