Former Uber employee Samuel Spangenberg alleged that when regulators raided local Uber offices, Uber’s standard response included severing all network connections so that law enforcement could not access documents stored on Uber servers outside the premises.
Fired in-house lawyers who questioned proposed document retention policy change
When Uber planned to change its document retention policy, two in-house attorneys expressed concern about the change and discussed their concerns with outside counsel. Uber fired them. Critics suggested that Uber sought to change the document retention policy in order to reduce materials available to litigation adversaries — and it seems the skeptical in-house attorneys thought that change, however beneficial to Uber’s business interests, was not permitted under legal rules requiring preserving documents relevant to existing disputes.
Uber driver killed girl in crosswalk
On December 31, 2013, an Uber driver killed six-year-old Sophia Liu, who was walking in a crosswalk with her mother and brother. At the time, the driver was between rides (with the Uber app open, hoping for a new request) but not actively serving a Uber passenger. As a result, Uber denied that it was responsible or had to pay. Uber offered automatic insurance to all drivers, but the insurance offered no coverage in this circumstance.
In response to a lawsuit brought by Sophia’s family, Uber argued that it is merely a “technology company,” that it “did not cause this tragic accident.”
Without admitting that it was obliged to provide payment in this circumstance, Uber ultimately reached a confidential settlement with Sophia’s family.
Ang Jiang Liu Et Al v. Uber Technologies, Inc. Et Al. Superior Court of California, County of San Francisco, Case No. CGC 14 536979. Docket.
Kalanick said Lyft’s casual drivers are “non-licensed” and “quite aggressive”
In 2013, when Uber focused on operations using properly-licensed black cars, CEO Travis Kalanick wrote a lengthy post assessing Lyft’s “ridesharing” using ordinary drivers:
Over the last year, new startups have sought to compete with Uber by offering transportation services without traditional commercial insurance or licensing. Uber refrained from participating in this technology sector — known as ridesharing — due to regulatory risk that ridesharing drivers may be subject to fines or criminal misdemeanors for participating in non-licensed transportation for compensation.
In most cities across the country, regulators have chosen not to enforce against non-licensed transportation providers using ridesharing apps. This course of non-action resulted in massive regulatory ambiguity leading to one-sided competition which Uber has not engaged in to its own disadvantage.
He continued:
[G]iven existing regulations, the Lyft/Sidecar approach is quite aggressive. The bet they are making is two-fold:
1. Uber, already a market leader, is too weary to enter the non-licensed market in the face of existing regulatory scrutiny.
2. Regulators for the most part will be unable to act or enforce in time to stop them before they have a critical mass of consumer support.
Kalanick specifically criticized incomplete enforcement and ambiguity that let some companies take a lead through aggressive interpretations rather than superiority on the merits:
[T]he lack of real clarity has created massive regulatory ambiguity. Without clear guidance or enforcement, this ambiguity has led to one-sided competition in which Uber has not engaged to its own disadvantage. It is this ambiguity which we are looking to address with Uber’s new policy on ridesharing.
After I posted an article quoting and discussing Kalanick’s post, Uber removed that document from its site. But Archive.org kept a copy. I also preserved a screenshot of the first screen of the document, a PDF of the full document, and a print-friendly PDF of the full document.
Kalanick says every Lyft trip “is a criminal misdemeanor”
In 2013, when Uber focused on operations using properly-licensed black cars, CEO Travis Kalanick remarked on what he saw as Lyft’s unlawful “ridesharing” approach using ordinary drivers:
I’m like, holy cow, every trip that’s happening—I’m reading the law—every trip that’s happening is a criminal misdemeanor committed by the person driving. I don’t think that’s a good law, but that is the law.
Kalanick explained three sources of cost advantage from Lyft’s unlawful approach: foregoing commercial licenses, foregoing commercial insurance, and thereby accessing a larger pool of potential drivers:
What they were able to do because of no commercial insurance and because of easy access to supply, the cost was really low. You could see a situation where they’d eat you up from the bottom up.
City managers told drivers to disguise themselves to avoid enforcement by MIA airport police
In response to enforcement by airport police at Miami International Airport, Uber’s Miami city managers advised drivers to conceal themselves from airport police:
This is an important message from Uber Miami for our valued partners in South Florida about serving South Florida airports, including Miami International Airport. There have been some instances of partners receiving tickets for picking up or dropping off Uber riders at the airport.
While we continue our discussions with authorities on ways to develop a long-term solution, here are a few things you can do to make the pickup and drop off experience more enjoyable for both you and the rider:
– Keep your Uber phone off your windshield – put it down in your cupholder
– Ask the rider if they would sit up front
– Use the lanes farthest from the terminal curbside for pickup and drop off
Fined for unlawful operations in France
A French court fined Uber €800,000, and fined two Uber managers €30,000 and €20,000, personally, in response to the company’s unlawful operations in France.
Lobbied against NY $0.50/ride fee to fund public transit
New York City taxis are obliged to collect a $0.50/ride fee which helps support public transit. But Uber lobbied against this fee applying to Uber rides, instead proposing that the city divert other public funds to support public transit.
Corporate structure avoided tax on most income
Through a set of affiliated companies and royalty agreements among them, Uber avoided certain corporate taxes for rides in most countries. Fortune explained the practice:
Whenever a passenger takes an Uber ride anywhere in the world outside the U.S., whether it’s in Beirut or Bangalore, the payment is sent to Uber B.V. The company typically sends 80% of that ride payment back to the driver via yet another Dutch subsidiary and keeps the remaining 20% as revenue.
Here’s where things get interesting. Uber International C.V. and Uber B.V. have an “intangible property license agreement” in which Uber B.V. must pay a royalty fee to Uber International C.V. for the use of Uber’s intellectual property—basically, the app that matches driver with rider. Under the terms of the agreement, Uber B.V. is to be left with an operating margin of 1%—effectively 1% of revenue—after subtracting the costs of operation. The rest of the profits get sent to Uber International C.V. as a royalty. And under Dutch law, that royalty payment isn’t taxable.
Let’s say that a passenger hails an Uber and takes a $100 ride across Rome (we’ll assume “surge pricing” is in effect). The payment goes to Uber B.V., which sends $80 back to the driver. The driver is responsible for paying his own taxes on that income. Of the $20 that’s left over, let’s say that Uber subtracts half to cover costs, leaving $10. But that’s not its taxable income. Uber B.V. will ultimately book only 1% of that initial $20 in revenue, or 20¢, as income. (The top corporate tax rate in the Netherlands is 25%, so the government will get 5¢ and the company keeps 15¢.) Uber B.V. then sends the balance of $9.80 to Uber International C.V. for the royalty. That’s one scenario. If Uber B.V. subtracts only $5 for costs, then the royalty payment to C.V. would be $14.80. The point is this: No matter what the amount of the royalty income that Uber International C.V. receives, virtually none of it will be taxed. It is what’s known as “ocean income,” because it sits in a gray area between national tax authorities.
Uber denied that these practices were improper. A spokesperson wrote: “Our corporate tax structure is probably the least innovative thing about Uber. It’s the standard approach adopted by most multinational companies.”
Avoided paying 20% VAT on booking fees
Uber treats its 40,000 UK drivers as separate businesses, each too small to register for VAT. As a result, Uber does not pay the UK’s 20% VAT on booking fees, saving Uber approximately £1,000 per driver per year.
In contrast, the source notes that Uber’s main UK competitors, Gett and mytaxi, both said they do pay VAT on booking fees.