Uber Under Investigation By Justice Department
Last week, we reported on some of the headwinds buffeting Uber, including its use of a program called Greyball is developed to help it avoid scrutiny from public officials. That little stunt has now landed it in hot water with the US District Attorney for the Northern District of California in San Francisco.
Uber has not been welcomed with open arms everywhere it goes. Many state and municipal authorities have questions about the ride hailing service, which operates very much like a private taxi service but without the government oversight that taxi companies and taxi drivers must submit to. The company has always taken a very confrontational position when it comes to any licensing requirements. It now appears, based on a story in the New York Times recently, that is used its Greyball program to identify officials working for the City of Portland, Oregon in 2014.
It did not have permission to operate in Portland at the time. On 16 occasions, local officials attempted to hail an Uber driver but the program identified them as potential public employees and denied them access to the system, sending fake information about mythical cars nearby that never showed up.
How did the company know they were public officials? Greyball used the credit card information provided by the city representatives to determine if it was issued by a credit union affiliated with the local police. It also searched the person’s social media profile to determine if they were affiliated with law enforcement.
Greyball was part of a larger Violation of Terms of Service program that Uber says helped protect its drivers from harm and determine if a person requesting a ride was legitimate. If a ride request was considered to be from someone suspicious, Uber’s app showed wrong information and the requester would not be picked up, several current and former Uber employees told Reuters.
A grand jury in San Francisco served a subpoena for company records on Uber recently. A grand jury investigates suspected wrongdoing. The fact that it issues a subpoena does not mean the Uber has violated any laws or will be charged with a crime. Attorneys for Uber last week acknowledged the use of Greyball in Portland but said it was used “very sparingly” in the spring of 2014. Uber was not granted permission to operate in that city until the following year.
The company claims use of the Greyball program was meant to protect its drivers. In some cities, unlicensed Uber drivers have been fined or had their cars impounded. That sounds semi-legitimate until you consider the way Uber has tried to insinuate its way into local markets without notifying officials and protesting vehemently that it is exempt from the same rules and regulations that pertain to normal taxi and limousine services.
Its combative approach to business has earned it tons of negative publicity. Uber says it lost $2.8 billion last year on revenues of $20 billion according to CNN. The company is currently valued at about $60 billion, which is absurd for a company that makes nothing and owns nothing other than an app. No wonder every car maker in the world wants to jump into the ride hailing business.