Sun, Oct 15, 2017 - Page 7 News List

Uber pushed the limits of the law — now comes the reckoning

The ride-hailing company faces at least five US probes, two more than previously reported, and the new CEO will need to dig the company out of trouble

By Eric Newcomer  /  Bloomberg

Illustration: June Hsu

Shortly after taking over Uber Technologies in September, Dara Khosrowshahi told employees to brace for a painful six months. US officials are looking into possible bribes, illicit software, questionable pricing schemes and theft of a competitor’s intellectual property. The very attributes that, for years, set the company on a rocket-ship trajectory — a tendency to ignore rules, to compete with a mix of ferocity and paranoia — have unleashed forces that are now dragging Uber back down to earth.

Uber faces at least five criminal probes from the US Department of Justice — two more than previously reported. Bloomberg has learned that authorities are asking questions about whether Uber violated price-transparency laws, and officials are separately looking into the company’s role in the alleged theft of schematics and other documents outlining Alphabet’s autonomous-driving technology. Uber is also defending itself against dozens of civil suits, including one brought by Alphabet that is scheduled to go to trial in December.

Some governments, sensing weakness, are moving toward possible bans of the ride-hailing app. London, one of Uber’s most profitable cities, took steps to outlaw the service, citing “a lack of corporate responsibility” and specifically, company software known as Greyball, which is the subject of yet another US probe. (Uber said it did not use the program to target officials in London, as it had elsewhere, and would continue to operate there while it appeals a ban.) Brazil is weighing legislation that could make the service illegal — or at least treat it more like a taxi company, which is nearly as offensive in the eyes of Uber.

Interviews with more than a dozen current and former employees, including several senior executives, describe a widely held view inside the company of the law as something to be tested.

Cofounder and former chief executive Travis Kalanick set up a legal department with that mandate early in his tenure. The approach created a spirit of rule-breaking that has now swamped the company in litigation and federal inquisition, said sources, who asked not to be identified discussing sensitive matters.

Kalanick took pride in his skills as a micromanager. When he was dissatisfied with performance in one of the hundreds of cities where Uber operates, Kalanick would dive in by texting local managers to up their game, set extraordinary growth targets or attack the competition. His interventions sometimes put the company at greater legal risk, a group of major investors claimed when they ousted him as CEO in June. Khosrowshahi has been on an apology tour on behalf of his predecessor since starting. Spokespeople for Kalanick, Uber and the US Department of Justice declined to comment.

Kalanick also defined Uber’s culture by hiring deputies who were, in many instances, either willing to push legal boundaries or look the other way. Chief security officer Joe Sullivan, who previously held the same title at Facebook, runs a unit where Uber devised some of the most controversial weapons in its arsenal. Uber’s own board is now looking at Sullivan’s team, with the help of an outside law firm.

Longtime legal chief Salle Yoo, who is soon to leave the company, encouraged her staff to embrace Kalanick’s unique corporate temperament.

“I tell my team, ‘We’re not here to solve legal problems. We’re here to solve business problems. Legal is our tool,’” Yoo said on a podcast early this year. “I am going to be supportive of innovation.”

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