Uber, the ride-hailing service that has become one of the tech industry’s most emulated companies, has smashed into a painful wall of reality in recent weeks, capped by a report Friday that the company has taken extraordinary measures to evade government officials in places where the service was restricted or banned.
The revelation, which Uber did not dispute in a statement, follows high-profile allegations of sexual harassment, questions about customer privacy and a “#deleteUber” campaign on Twitter, sparked by accusations that the company was not respecting a driver strike at John F. Kennedy International Airport in New York City in January.
After a video emerged this week of Uber chief executive Travis Kalanick arguing with an Uber driver over pay rates, Kalanick issued a public apology and announced that he was seeking help managing the company.
Friday’s twist came from a story in the New York Times about how Uber worked to identify and defeat government officials in a years-long game of cat and mouse that spanned several nations. Uber mined customer geolocation data, credit-card information, app-usage habits and even social-media profiles to identify those working for city governments or driving for rival ride-hailing services.
The series of problems is all the more striking because of Uber’s long-running status as a proudly disruptive Silicon Valley darling — to the point that a remarkable range of businesses offering everything from babysitting to lunch delivery to massages got described as “the Uber of” whatever market they were targeting. Business schools, meanwhile, studied the future of the “sharing economy” that Uber seemed poised to lead.
“This is a really bad month. The number and kind of problems they have is an unusual array of bad luck and bad behavior combined,” said Paul Argenti, a professor of corporate communication at Dartmouth College's Tuck School of Business. Though he and other experts suggested the company could recover its momentum with better management, “Ultimately, your reputation is a complex thing,” he said. “There has to be a lot of bad stuff going on for this to make a difference. I still think they’re not there.”
The company, based in San Francisco, was founded in 2009 and operates in hundreds of cities in dozens of nations, though many city governments in the United States and elsewhere have banned it. Even in cutthroat Silicon Valley, the company is known for its aggressive, win-at-all-costs culture. Uber also has gradually pushed into other businesses, such as food delivery, while pioneering research into driverless cars. Though not publicly traded, the company is estimated to be worth at least $60 billion.
But like many fast-growing tech companies, Uber has long had a contentious relationship with government officials, especially in the cities where it thrived by upending the heavily regulated world of taxi services, whose incumbent companies and drivers complained that Uber sidestepped regulations. Uber’s insistence that its drivers, no matter how many hours they worked, were contractors rather than employees proved controversial even as it saved the company from paying costly benefits.
“Uber is so visible, and the question is how Uber can come back from this from the cultural and recruiting perspectives — let alone ever be seen as a moral industry leader,” said Chris Messina, a former Uber and Google executive who left the ride-hailing company in January.
Uber used a tool, code-named Greyball, in 2014 to identify Portland, Ore., officials who posed as regular customers to request rides in order to gather evidence that the company was operating illegally in the city, according to the Times report. But rather than procuring a driver for the “customer,” the service showed officials fake versions of the Uber app, complete with fake drivers. Any real ones who did respond to the requests for rides would quickly cancel, sometimes after direct intervention from Uber officials to drivers, allowing the service to avoid detection in a city where it was banned.
“This program denies ride requests to fraudulent users who are violating our terms of service, whether that’s people aiming to physically harm drivers, competitors looking to disrupt our operations, or opponents who collude with officials on secret ‘stings’ meant to entrap drivers,” Uber said Friday in a statement.
Greyball reportedly began as a tool to flag abusive riders in countries where violence against Uber drivers was happening, sometimes incited by rival taxi services. But the company eventually discovered that it could help identify government officials who were scrutinizing the company, the Times reported. To determine if a user might be a government investigator, Uber reportedly looked at roughly a dozen factors, such as whether the user spends a lot of time around government offices and frequently activates the app near those buildings. The tool is still being used today, according to the Times.
Uber had the ability to tag suspicious users with coding that led to special treatment afterward. Greyball also has been used to prevent taxi drivers from tracking the locations of Uber drivers. This practice was approved by Uber’s lawyers, according to the Times.
This is not the first time Uber has covertly taken aim at rivals. News reports in 2014 described how the company had engaged in corporate warfare with its U.S.-based competitor, Lyft, by secretly poaching drivers and sending bogus ride requests to drivers. Uber has also run grass-roots organizing campaigns designed to influence state legislatures. In other cases, Uber executives have suggested digging up opposition research on journalists. Revelations about another information-gathering tool, called God View, sparked controversy in 2014 when news reports said it allowed Uber to track the location of users in ways they did not expect.
In Portland, officials sought to gather evidence for Uber’s illegal operations by having the authorities request rides on the app. But having been flagged by Greyball, law enforcement officials were left hanging as the fake version of the app failed to get them any rides. In 2015, the city began to allow Uber to operate legally in the city.
(Amazon.com chief executive Jeffrey P. Bezos, who also owns The Washington Post, was an early investor in Uber.)
Security analysts said that with the amount of personal information freely available on the Web, it is almost inevitable that a company such as Uber would move to exploit it.
”Greyballing is an acceptable business risk in the poorly-governed realm of cyberspace,” said Kenneth Geers, a former analyst at the National Security Agency and a senior research scientist at Comodo, a global cybersecurity firm.
Now that policymakers are aware of Greyball, other analysts say, they could take steps to make the tool illegal — forcing Uber to adapt again in its push to expand into new markets.
Hayley Tsukayama and Elizabeth Dwoskin contributed to this report