A December 2017 letter confirmed a “pending criminal investigation” against Uber by the US Attorney’s Office of the Northern District of California. This was the first official confirmation of such an investigation.
The letter indicated that the US Attorney’s Office had interviewed ex-Uber security analyst Richard Jacobs. See Jacobs’ allegations.
Shervin Pishevar, one of the earliest investors in Uber, resigned from his investment firm (and hence ended his affiliation with Uber) in the face of allegations of sexual misconduct. He denied the allegations.
In November 2017, Bloomberg reported that five women had accused Pishevar of using his position to make unwanted sexual advances.
Uber was temporarily banned in Delhi, India in December 2014 after a driver allegedly took a passenger to a secluded area and raped her. The decision followed mounting accusations that the company had failed to conduct proper background checks on drivers.
The city of Sheffield, UK suspended Uber’s license. Uber said this was an “administrative error” resulting from the company’s failure to change the name on its license based on the departure of the company’s UK head. Sheffield said such a change is not permitted, while Uber said it successfully made this change in other jurisdictions.
Uber paid a $78,000 fine September 2015 and suspended service in Anchorage, Alaska after it was determined that the company had wrongfully classified drivers as independent contractors.
When former employee Richard Jacobs sent a demand letter alleging possible criminal behavior by the Uber team where he previously worked, Uber viewed the claims as extortion. Uber deputy general counsel Angela Padilla said Jacobs’ claims were “extortionate.” Yet Uber paid Jacobs $4.5 million ($2 million upfront, $1.5 million in stock, and an additional $1 million to consult with the company and cooperate in any investigations over the course of the next year), plus an additional $3 million to his attorney.
Concerns resulting from Jacobs’ letter and the practices he reported
Criticizing Uber’s Competitive Intelligence group and the company’s intentional concealment of its practices, federal judge William Alsup offered a stern critique of Uber. From the bottom line tha tUber “withheld evidence”, Alsup continued:
I can no longer trust the words of the lawyers for Uber in this case. If even half of what is in that letter is true, it would be an injustice for Waymo to go to trial.
Alsup specifically criticized Uber’s use of a system that deleted correspondence automatically, saying this was contrary to court instructions for producing relevant documents:
The server [that Uber searched] turns out to be for dummies, that’s where the stuff that doesn’t matter shows up. The stuff that does matter is going to be in the Wickr evaporate file.
Alsup expressed shock at Uber’s practices:
You don’t get taught how to deal with this problem in law school. In 25 years of practice and 18 years in this job I have never seen such a problem.
He continued after a second day of hearings:
I’ve never seen a case where there were so many bad things that—like Uber has done in this case. So many
Alsup said he plans to tell the jury about the new findings including Uber’s concealment of its practices and intentional destruction of staff discussions:
That is going to hurt your case because any company that would set up that kind of system is as suspicious as can be. I don’t know how you are going to get around that.
Uber’s Competitive Intelligence group used surreptitious practices to communicate with others in Uber in order to avoid creating digital records that could be used in future legal disputes.
Some employees used the Wickr service, which automatically deletes communications after a preset period.
Some employees used special devices for hiding communications. These “non-attributable” devices could not be easily traced back to Uber. Reporting from a hearing, a Tweeter reported Judge Alsup asking who supplied these devices to employees. An ex-Uber employee explained that Uber used third-party vendors so that the expense would stay off of Uber’s books.
The ex-employee confirmed the purpose of these methods: “to evade, impede, obstruct, influence several ongoing lawsuits against Uber.” He said email was a last resort because the messages could be used in litigation. He continued: “There was legal training around the use of attorney-client privilege markings on written materials and the implementation of encrypted and ephemeral communications intended to destroy communications that might be considered sensitive.”
A letter from an attorney representing Richard Jacobs, a former Uber security analyst, alleged that Uber had assembled a “Market Analytics” unit to acquire “trade secrets, code-based & competitive intelligence.” The New York Times reported that the Market Analytics team “frequented the code-sharing site GitHub, searching for private material that may have been accidentally revealed by competitors.” The Times also said Uber recruited employees of competitors “to steal trade secrets.”
Japanese holding company SoftBank offered to purchase shares of Uber at a $48 billion valuation, a 30% discount from Uber’s most recent valuation of $68.5 billion. The key news causing the discount was the set of scandals that arose during 2017 — broadly, those summarized on this site.