Uber facing federal probe on allegations of espionage [Denver Post]
Sum and Substance: SAN FRANCISCO — Federal prosecutors are investigating allegations that Uber deployed an espionage team to plunder trade secrets from its rivals. The revelation triggered a delay in a high-profile trial over whether the beleaguered ride-hailing service stole self-driving car technology from a Google spinoff.
The probe under way at the U.S. Justice Department centers on a 37-page letter that described allegations made by Richard Jacobs, Uber’s former manager of global intelligence. Jacobs had the letter sent in May to an Uber lawyer. The letter contended that Jacobs had been wrongfully demoted and then fired for trying to stop the company’s alleged misconduct.
Uber paid Jacobs $4.5 million as part of a confidential settlement after his firing, Jacobs said while being grilled by Waymo lawyer Charles Verhoeven. Part of that settlement includes Uber stock, a $1 million consulting fee and a provision requiring him not to say anything that would harm Uber.
“It is possible that he has been bought off by Uber,” Alsup said of Jacobs at one point during Tuesday’s drama.
Alsup described the allegations in the letter as “scandalous” and lashed out at Uber’s legal team for not informing him about them before he was notified by the Justice Department. “I can’t trust anything you say because it has been proven wrong so many times,” Alsup told Uber attorney Arturo Gonzalez. The judge also called Uber’s espionage team “a plumber’s unit doing bad deeds.” …
My Take: It’s now spy vs spy in the Waymo/Uber lawsuit. Uber can’t seem to keep its stories straight as it attempts to discredit whistleblower Jacobs. While Uber’s counsel was calling Jacobs an extortionist for attempting to extract payments to keep Uber’s dirty little secrets out of the news, CEO Dara K was essentially confirming Jacobs allegations in a tweet (see article below.)
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While the accusations will probably continue to fly in this case, one thing is not in dispute. Uber paid Jacobs $4.5 million, structured as a consulting contract, in exchange for an agreement not to disparage the company – which is apparently what Jacobs has done. Talk about people behaving badly.
Uber CEO says he banned employees from using secure messaging apps like Wickr, Telegram [Mashable]
Sum and Substance: Uber’s new CEO has been trying to clean-up the mess cofounder Travis Kalanick left behind. One sweeping change was a total crackdown on secure messaging apps when it comes to business matters.
CEO Dara Khosrowshahi tweeted Wednesday that he forbid employees from using apps like Wickr and Telegram shortly after he joined the company. He shared that nugget of information while Uber’s top lawyer is currently testifying on allegedly receiving stolen proprietary information from Google’s Waymo. Wickr, like Snapchat, allows ephemeral messaging so that the messages disappear and are not stored on the device.
It seems obvious that employees should not discuss “Uber-related business” in secure channels where Uber management and judges (in case they were to be sued) could not access that information.
Of course, that’s not how Kalanick is known to operate, and it’s clearly not how he helped build Uber into a tech giant.
My Take: This might explain something that happened to me on several occasions. I would get an email or a text message from Uber about a bonus offer or some other matter, and when I would go back later to find the message, it was gone – thereby depriving me of documentation I needed to deal with driver support reps. Has anyone else had this experience in communication with Uber?
Uber’s Losses Widen as SoftBank Launches Bid to Buy Shares [Bloomberg]
Sum and Substance: Uber Technologies Inc.’s net loss widened to $1.46 billion in the third quarter, according to people with knowledge of the matter, as the ride-hailing leader struggled to fend off competition, legal challenges and regulatory scrutiny.
The San Francisco-based company reported financials to shareholders as part of a formal bid Tuesday night from a SoftBank Group Corp.-led consortium looking to buy a large block of stock. SoftBank said in an emailed statement that at least two of Uber’s early backers intend to sell. The sale of those shares would value the business at $48 billion, a 30 percent discount to the last private valuation.
General Atlantic and Russia’s DST Global, which had both been in talks to buy stock, dropped out of the deal, said one person, who asked not to be identified because the details are private. The remaining bidders in the group are SoftBank, Dragoneer Investment Group, TPG, Tencent Holdings Ltd. and Sequoia Capital, which are looking to buy at least 13.4 percent of outstanding shares, said two people. …
My Take: These losses are just astounding. Never before has a startup lost as much money as Uber.
Uber lost almost as much in the first two quarters of 2017 ($2.6 billion) as they did in the full fiscal year of 2016 ($2.8 billion). Consider this: for all the attention focused on Softbank’s potential investment, at current burn rates, Softbank’s cash infusion will last Uber all of two months.
Here’s my prediction: Uber is going to raise fares sooner rather than later. They don’t have a choice. They simply can’t sustain these levels of losses indefinitely.
Uber Hit With $8.9 Million Fine In Colorado For Allowing Drivers With Felonies And Motor Violations To Work [Jalopnik]
Sum and Substance: A Colorado regulator on Monday fined Uber with a nearly $9 million penalty, after an investigation revealed that 57 people with criminal and motor vehicle offenses were allowed to drive with the ride-hailing company. States across the U.S. have been considering laws to require additional background checks for individuals who drive for Uber and competitors like Lyft. In Colorado, the state’s Public Utilities Commission investigated the company’s drivers after an incident this past March, reported The Denver Post, when a driver dragged a passenger out of a car and kicked them in the face.
The commission said it found 57 drivers had issues that should’ve disqualified them from driving for Uber, including felony convictions for driving under the influence and reckless driving, while others had revoked, suspended or canceled licenses. A similar investigation was conducted on Lyft, the Post reported, but no violations were revealed.
My Take: So much for Uber’s commitment to safety. How can Uber say safety is their top priority when their screening process for drivers lets dozens with felony convictions get approved? These questionable drivers now transport strangers who have no clue that their drivers may have criminal records. Kudos to Denver authorities for calling Uber to the carpet on this deception. Maybe other cities will start following suit. I hope so – for safety’s sake.
Readers, what do you think of this week’s round up?
-John @ RSG
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