All kinds of interesting info in this week’s round up, including Uber’s secret tool for keeping law enforcement in the dark, a potential “air taxi” at CES, and a new settlement in New York. Today, senior RSG contributor John Ince covers Uber’s dark deeds, how Travis profits, and more in this round up.
Uber’s Secret Tool for Keeping the Cops in the Dark [Bloomberg]
Sum and Substance: At least two dozen times, the San Francisco headquarters locked down equipment in foreign offices to shield files from police raids.
In May 2015 about 10 investigators for the Quebec tax authority burst into Uber Technologies Inc.’s office in Montreal. The authorities believed Uber had violated tax laws and had a warrant to collect evidence. Managers on-site knew what to do, say people with knowledge of the event. Like managers at Uber’s hundreds of offices abroad, they’d been trained to page a number that alerted specially trained staff at company headquarters in San Francisco. When the call came in, staffers quickly remotely logged off every computer in the Montreal office, making it practically impossible for the authorities to retrieve the company records they’d obtained a warrant to collect. The investigators left without any evidence.
Uber has already drawn criminal inquiries from the U.S. Department of Justice for at least five other alleged schemes. In February, the New York Timesexposed Uber’s use of a software tool called Greyball, which showed enforcement officers a fake version of its app to protect drivers from getting ticketed. Ripley’s existence gives officials looking into other Uber incidents reason to wonder what they may have missed when their raids were stymied by locked computers or encrypted files. Prosecutors may look at whether Uber obstructed law enforcement in a new light.
My Take: Viewed in isolation, this report is disturbing, though not surprising. But when viewed in the context of the next article – TK cashing in about $1.4 billion in his stock during the Softbank deal – this report is really upsetting. Essentially as a society we’re saying “Do what works. Even if you eventually get caught, you’ll still get rich.”
Travis Kalanick reportedly plans to sell about 29% of his Uber shares [Techcrunch]
Sum and Substance: Uber founder and former CEO Travis Kalanick plans to sell nearly a third of his shares in the company, reports Bloomberg. The transaction would be part of the tender offer in which SoftBank Group agreed to buy shares in Uber valuing it at $48 billion, a huge discount from its last fundraising valuation. According to Bloomberg’s sources, Kalanick wants to sell 29% of his stake and would make about $1.4 billion.
Kalanick, who resigned as CEO in June but remains on Uber’s board of directors, currently owns about 10 percent of the ride-sharing company. Bloomberg’s sources say he originally wanted to offer up to half of his Uber stake, but couldn’t because of limits in the tender offer agreement. Kalanick stands to become a billionaire if the sale goes through, but the deal is also notable because he claimed during the Vanity Fair New Establishment Summit in October 2016 that he has never sold a single Uber share, even though he was still paying the mortgage on his home.
My Take: Not bad for a few years work. Let’s say Kalanick put in 7 years, so his annual haul was $200 million per year, not counting his salary and bonuses. Taxes for TK will amount to about $300 million, leaving him with $1.1 billion in the bank.
As a society we just accept these outlandish disparities in income. We rationalize them by saying TK deserves to be compensated for taking the risk and for dedicating his life to this company. Okay, I get that. But is he entitled to 2,500 times what a full time driver might be making, say $80,000 gross (to be very generous), for 80 hour weeks (which is physically impossible to sustain)? We’re not even counting taxes, car maintenance, depreciation, gas, insurance and all the other expenses that TK so adeptly shifted over to the driver.
No, TK does not deserve this kind of payday for all his duplicity. And remember TK is only cashing out 29% of his stock. He’s still got another $3 billion on paper.
Here’s what Uber for the skies might feel like – Bell Helicopter became the first helicopter company to exhibit at CES, debuting its concept of an air taxi. [Mashable]
Sum and Substance: Ride-sharing has disrupted transportation in many cities, and not always for the better. Some surveys show services like Uber and Lyft actually add to the congestion in urban areas, with more cars on the road competing for the same amount of road space. To solve the problem, many are looking to the skies. After Ehang captivated CES two years ago with its passenger drone, Uber put a stake in the clouds by publishing a white paper on airborne mobility solutions — essentially air taxis — in 2017.
Bad news first: Bell only showed off a VR simulator of the concept, and it didn’t discuss what propulsion its air taxi would use, although it did say the aircraft would take off and land vertically, then alter its configuration to fly more like a plane, similar to the Project Wing drones developed by Alphabet’s X (formerly Google X).
The good news is the simulation was pretty convincing.
Optimistic? Probably. Compelling? Definitely. That’s probably why Uber is so interested and is partnering with Bell and others to make the vision — an affordable vision, importantly — a reality. When? Sometime if the 2020s, if we’re lucky, and that’s only if a host of problems are solved. First and foremost, noise. Heliports are already a target of communities because of the noise pollution they generate, and putting dozens (if not hundreds) of more aircraft in city skies seems like a recipe for cacophony. Bell says it’s well aware of this issue and is building its aircraft to be as quiet as possible. But without a real test, or even knowledge about the propulsion system, it’s impossible to know.
My Take: We’ve now been seeing various demos and VR interpretations of Uber’s grand scheme for air taxis. Consider me a skeptic. It makes for a great feature at a consumer trade show like CES, but in real life there are just too many potential problems, like environmental, regulatory, marketing, and psychological for this to make much sense to me. What do you think?
Uber reaches $3 million settlement with New York drivers over fees [CNBC]
Sum and Substance: A proposed class-action lawsuit accused the ride-sharing company of docking excessive fees from their fares. New York drivers also accused Uber of false advertising for allegedly offering guaranteed compensation without disclosing the conditions. Uber denied all allegations, and settled without admitting wrongdoing to avoid the cost and inconvenience of litigation, according to the settlement.
Uber Technologies Inc agreed to pay up to $3 million to settle a proposed class-action lawsuit brought on behalf of 2,421 drivers in New York who accused the ride-sharing company of docking excessive fees from their fares. A preliminary settlement was filed on Monday with the federal court in Brooklyn, New York, and requires approval by U.S. District Judge Nicholas Garaufis. Drivers accused Uber of breach of contract for including sales tax and a “Black Car Fund” fee, which relates to workers’ compensation, in fares when calculating service fees, thereby increasing the amounts owed. They also accused Uber of false advertising for allegedly offering guaranteed compensation without disclosing the conditions, such as in an ad telling drivers they could “DRIVE & MAKE $5,000 Guaranteed” in their first month behind the wheel.
My Take: Haven’t we seen this movie before? Here’s the plot line: Uber is accused of doctoring numbers and shortchanging drivers. Uber issues denials. Drivers gather evidence, hire a lawyer and sue. Depositions are prepared and evidence is presented. The lawyers get together and hash out a multi-million dollar settlement. The lawyers walk away with one third of of the settlement. The drivers divide up what’s left and end up with a pittance.
It’s better than nothing, but I’m still waiting for the Uber movie that has a really happy ending. What do you think?
Readers, what do you think of this week’s round up?
Make Every Mile CountDid you know that every 1,000 business miles can generate $535 in tax deductions? Never miss another mile with the new QuickBooks Self-Employed automatic mileage tracker.
-John @ RSG
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