After an Uber self-driving vehicle struck and killed a pedestrian in Tempe, Arizona, the state’s governor ordered all self-driving Uber vehicles off the road. The governor called Uber’s approach “an unquestionable failure to comply” with the state’s expectations for public safety.
Overlapping investor SoftBank sought to reduce competition
As Uber announced its sale of Southeast Asia assets to Grab, some flagged the overlapping investor that facilitated the transaction. In particular, SoftBank (a Japanese investment firm) held shares in both Grab and Uber. Owning part of both companies, SoftBank stood to profit no matter which one prevailed in the markets where both operated — but stood to lose if the firms engaged in continued competition with each other.
Furthermore, SoftBank specifically sought to broker peace between Grab and Uber: When investing in Uber in December 2017, SoftBank sought a discount exactly because it could influence Uber’s competitors across Asia.
Similar concerns arose from SoftBank holding shares in both Uber and Ola, a ride-hailing competitor in India. Discussing those overlapping holdings, SoftBank told the Economic Times of India: “we are hoping that we make peace between them at some point.” Such a “peace” could raise competition concerns in so far as it entailed competitors agreeing not to compete.
See Edelman’s critique of SoftBank’s role as well as economist Martin Schmalz’s tweet on the impact of cross-ownership.
Poised to sell Southeast Asia assets to Grab
Uber announced plans to sell its Southeast Asia assets to Grab, the dominant ride-hailing firm in that region. This transaction raised competition concerns because Grab and Uber jointly controlled the overwhelming majority of ride-hailing service in the region. The transaction thus created an effective monopoly for Grab — allowing the company to charge higher prices and fees, to the detriment of both drivers and passengers.
Sold Chinese assets to Didi
Rather than continuing to compete with Didi Chuxing, the dominant ride-hailing service in China, Uber sold its Chinese assets to that firm — essentially ending competition in ride-hailing in that country.
This transaction raised several concerns. One, Didi and Uber jointly controlled the overwhelming majority of ride-hailing service in China. The nearest competitor had just 3.3% market share as of the time of the transaction. The transaction thus created an effective monopoly for Didi — allowing Didi to charge higher prices and fees, to the detriment of both drivers and passengers.
Two, as part of the transaction, Uber received 17.5% ownership of Didi, and Didi in turn held an investment in Lyft. So the Didi-Uber deal made Uber a part owner of its biggest US competitor.
Removed second staff person from autonomous cars
Historically, Uber’s autonomous cars had two staff members onboard: One to take over driving in case of problems, and another to monitor onboard systems to track performance and label data. But Uber later moved to a single operator. Reviewing 100 pages of internal company documents, the New York Times reported that some employees expressed safety concerns about the change. Among other concerns, they noted that solo work would make it harder to remain alert during monotonous driving.
Broadly, problems seemed to have unfolded as internal critics worried. One Uber autonomous car safety driver was fired after being seen asleep at the wheel. When an Uber vehicle struck and killed a pedestrian in Tempe, Arizona, early review of the onboard video shows the staff person looking down or sideways, perhaps at a phone or onboard systems, but not at the road.
Self-driving cars fell short of expectations
Reviewing 100 pages of internal company documents, the New York Times reported that Uber vehicles were falling short of company objectives. For example, Google cars could drive an average of nearly 5,600 miles before a driver had to take control from the computer, whereas Uber vehicles struggled to meet the company’s target of one intervention every 13 miles.
Self-driving vehicle struck and killed pedestrian
An Uber self-driving vehicle struck and killed a pedestrian in Tempe, Arizona.
Early reports indicated that the pedestrian was crossing a roadway after dark, outside a crosswalk, and that Uber would probably be deemed not at fault in this incident.
But reviewing the crash video, multiple concerns arose. For one, Uber’s onboard driver — responsible for taking over in case of system problems — was looking down or sideways, hence unable to see the pedestrian. If her hands were on the steering wheel, ready to take over driving from the computer, that is not apparent from the video. Two, the pedestrian was making steady progress across the roadway. Three, some experts said a standard automatic emergency braking system, even on ordinary commercial vehicles, would have been able to detect the pedestrian and at least apply the brakes.
Velodyne, which makes the LIDAR sensors used on Uber’s autonomous cars, expressed surprise that the Uber vehicle hit the pedestrian. A Velodyne spokesperson explained in an email: “We are as baffled as anyone else. … Certainly, our Lidar is capable of clearly imaging Elaine and her bicycle in this situation.” Velodyne suggested that Uber’s software might be at fault, explaining that “[o]ur Lidar doesn’t make the decision to put on the brakes or get out of her way” and that Uber’s systems would need to make those decisions.
Holder report recommended firing SVP of Business Emil Michael
Business Insider reported that Eric Holder’s report recommended that Uber’s SVP of Business, Emil Michael, leave the company. BI noted that this recommendation was, for whatever reason, not included in the version of the Holder report available to the public. But, consistent with BI’s reporting, Michael left Uber in June 2017.
Uber CEO Travis Kalanick had been especially close to Michael. BI characterized Michael as Kalanick’s “wingman.”
Encouraged Argentinian users to pay via Bitcoin-backed credit card issued from Gibraltar
After credit card processors were ordered not to process payments for Uber in Argentina, Uber found a workaround. In particular, Uber encouraged Argentinian users to get credit cards from Xapo, a startup that issues credit cards that draw funds from a customer’s Bitcoins. Xapo issued cards out of Gibraltar and thus escaped the Argentinian injunction that targeted local credit card issuers.
Ignored multiple injunctions to cease operation in Argentina
Uber was found to be unlawful in Argentina, including for operating without a permit or tax-identification number.
A series of injunctions ordered the company to cease operations, and ordered telecommunications vendors and payment processors to cease supporting Uber. The Stanford Center for Internet & Society explained:
Shortly thereafter, a criminal prosecutor from the City of Buenos Aires issued an injunction ordering ENACOM (Argentina’s FCC) to block the UberApp. Apparently, ENACOM refused to comply with the injunction arguing that a local prosecutor was not a competent authority to order such a measure. On April 22, a criminal judge from the City of Buenos Aires ordered ENACOM to block Uber within the City of Buenos Aires jurisdictional limits. It is not clear whether ENACOM, a federal agency, will comply with a City of Buenos Aires order. Content circulation through communications networks is a federal matter in Argentina, which is supposedly beyond the reach of local government jurisdiction.
Finally, the Consumers Protection Agency of the City of Buenos Aires—an administrative agency—issued an injunction ordering telecoms to block the App and credit card companies to block any transaction related to the App. The injunction was issued against telecoms and credit cards as “contributors” to an allegedly harmful activity. A few days later, also a judge in Buenos Aires ordered credit card companies to cease their operations with Uber.
Nonetheless Uber continued operations, including encouraging Argentina users to pay via a Bitcoin-backed credit card.