Commentary

Feds Conducting Criminal Probe Into Uber's Use Of 'Greyball'

A Northern California federal grand jury is reportedly reviewing evidence brought by the Justice Dept. against executives at Uber Technologies for its use of “Greyball” technology to evade transportation authorities in locales where the ride-sharing service has not been approved, report Reuters’ Dan Levine and Joseph Menn.

“The federal inquiry was disclosed in a transportation audit conducted by the City of Portland, Ore., published last week. In the audit, Portland officials said they had been notified by the United States attorney’s office for the Northern District of California about the existence of the inquiry. The City of Portland said it was cooperating with the inquiry,” writes Mike Issac for the New York Times.

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In March, Issac broke the story that Uber was using Greyball, which it had developed in 2014 to “root out people it thought were using or targeting its service improperly,” and also to “aid entrance into new markets where its service was not permitted” across the globe.

“In those areas, transport regulation officials posed as passengers in a bid to prove that the company was operating illegally. Greyball worked out who the officials were and blocked them from booking rides with the company's drivers,” as the BBC explains.

Bloomberg’s Alexis Kramer reported the existence of a federal probe of Uber last week, but it did not identify it as criminal, Reuters’ Levine and Menn write, also pointing out that the investigation is in its early stages and “the likelihood of anyone being charged is unclear.”

Neither the Justice Dept. not Uber responded to several reporters’ requests for comment about the investigation.

“In correspondence with Portland, Uber acknowledged that it applied Greyball to 17 accounts while operating in the city without permission in December 2014. Uber stopped using Greyball in Portland once the city legalized ride-hailing services,” reports Leslie Hook for Financial Times. “Other cities have also started investigating the use of Greyball, including San Francisco, but none has pressed formal charges.”

“The San Francisco company has said it specifically aimed the technology at violators of its terms of service, the legal agreement required to begin using the app. The company said it used the technology for other purposes, including to test new features, issue marketing promotions, prevent fraud and protect drivers from physical harm,” Del Quentin Wilber and Greg Bensinger report for the Wall Street Journal.

“Uber has said that it has ceased the program but the potential for this investigation could dredge up further details of how it operated, and also cause more drama for Uber at a time when it is not short on corporate headaches,” writes Jon Russell for TechCrunch. “Just this year alone, Uber has commissioned a sexual discrimination investigation after former engineer Susan Fowler went public with her experiences inside the company, while CEO Travis Kalanick was caught on video blasting an Uber driver who complained about pay rates.”

But, “to his credit Kalanick … has admitted that he needs to “change as a leader and grow up,” Russell writes.

“Uber, which is valued privately by investors at close to $70 billion, has a reputation among Silicon Valley companies for a hard-charging workplace culture that is driven by Kalanick himself. The 40-year-old is known as a quick-tempered and combative manager who aims to win-at-all costs and inspires fierce loyalty in his inner circle,” Elizabeth Dwoskin and Craig Timberg observe for the Washington Post.

The Wall Street Journal  reported last week that Uber has interviewed “heavyweights” such as Thomas Staggs, the former Walt Disney Co. COO, Karenann Terrell, former CIO of Walmart, and Helena Foulkes, EVP of CVS Health for the No. 2 position vacated in a huff after six months by former Target CMO Jeff Jones in late March. Staggs and Foulkes are no longer in discussions, it said. 

MediaPost’s Programmatic Insider columnist John Motavalli revealed last week that (the now totally renamed) About.com founder Scott Kurnit was also “being talked about” for the job.

The nature of the search is “a sign the ride-sharing titan is looking to temper Mr. Kalanick’s idiosyncrasies in exchange for a corporate culture more typically in tune with its size and ambitions,” wrote the WSJ’s Greg Bensinger, Betsy Morris and Georgia Wells. 

“Uber is describing the new COO to candidates as a partner to … Kalanick, not merely a deputy such as he has had in the past, these people said. Mr. Kalanick last month said he is looking for 'a peer who can partner with me,’ they continued.”

Good luck with that.

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