The Department of Justice has launched a criminal investigation into Uber’s use of a secret software that was used to evade authorities in places where its ride-hailing service was banned or restricted, according to a person familiar with the government’s probe.
The investigation is in its early stages, but deepens the crisis for the embattled company and its chief executive and founder Travis Kalanick, who has faced a barrage of negative press this year in the wake of high-profile sexual harassment complaints, a slew of high-level executive departures, and a consequential trade secrets lawsuit from Google’s parent company.
The federal criminal probe, first reported by Reuters, focuses on software developed by Uber called “Greyball.” The program helped the company evade officials in cities where Uber was not yet approved. The software identified and blocked rides to transportation regulators who were posing as Uber customers to prove that the company was operating illegally.
Uber declined to comment on the criminal investigation. The Department of Justice declined to comment, citing its practice of not confirming or denying possible investigations.
In a letter last week to Portland authorities, who had requested information about the program as part of a civil probe, Uber said greyballing refers to the practice of showing some customers a different version of the app than most customers see. Uber’s attorneys said the program was used “exceedingly sparingly” in Portland, and that the company had not used it since April 2015, when Portland adopted preliminary rules allowing Uber to operate.
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.
In its earlier years, the company employed cutthroat tactics against its competitor Lyft At one point, Uber employees would summon Lyft drivers and then cancel rides. Kalanick once bragged about a feature, called “God View,” which it used to track a journalist and other noteworthy individuals. He has charged into legal battles with transportation regulators and taxi drivers in cities across the world.
Until recently, Uber emerged from its many controversies relatively unscathed. It had been on a rocket-ship trajectory, raising more than $12 billion in venture capital, poaching executive talent from Google, and setting up shop in hundreds of cities.
But a series of crises this year have rocked the company and shaken Kalanick to his core, according to people who know him.
In February, a female engineer wrote a blog post about a traumatizing experience of sexual harassment and retaliation from the company’s human resources department. After the post went viral, Kalanick apologized and hired former Attorney General Eric Holder to investigate the allegations.
The crises continued when, later that month, Kalanick was videotaped verbally attacking an Uber driver who complained about the company’s wages. The videotape also went viral, and was followed by more negative press and a slew of executive departures.
Also in February, the company was slammed with a massive trade secrets lawsuit from its competitor in self-driving cars, Waymo. Waymo, which is the self-driving car division of Google’s parent company, charged Uber and a former Google employee of stealing 14,000 documents detailing Waymo’s proprietary technology. Waymo has requested that a judge temporarily block Uber’s self-driving program for the duration of the lawsuit.
Kalanick seemed to acknowledge the gravity of the growing crisis in a recent letter to the staff. “I must fundamentally change as a leader and grow up,” he wrote. “This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.”