The Justice Department has launched a criminal investigation into Uber’s use of a secret software that was used to evade authorities in places where its ride-hailing service was banned or restricted, according to a person familiar with the government’s probe.
The investigation, in its early stages, deepens the crisis for the embattled company and its chief executive and founder, Travis Kalanick, who has faced a barrage of negative press this year in the wake of high-profile sexual harassment complaints, a slew of executive departures and a consequential trade-secrets lawsuit from Google’s parent company.
The federal criminal probe, first reported by Reuters, focuses on software developed by Uber called “Greyball.” The program helped the company evade officials in cities where Uber was not yet approved. The software identified and blocked rides to transportation regulators who were posing as Uber customers in an effort to prove that the company was operating illegally.
Uber declined to comment on the criminal investigation. The Justice Department declined to comment, citing its practice of not confirming or denying possible investigations.
In a letter last week to Portland, Ore., authorities, who had requested information about the program as part of a civil probe, Uber said greyballing refers to the practice of showing some customers a different version of the app than most customers see. Uber’s attorneys said that the program was used “exceedingly sparingly” in Portland and that the company had not used it since April 2015, when Portland adopted preliminary rules allowing Uber to operate.
San Francisco-based Uber, valued privately by investors at close to $70 billion, has a reputation among Silicon Valley companies for a hard-charging workplace culture driven by Kalanick. The 40-year-old is known as a quick-tempered and combative manager who aims to win at all costs and inspires fierce loyalty in his inner circle.
Until recently, Uber emerged from its many controversies relatively unscathed. It had been on a rocket-ship trajectory, raising more than $12 billion in venture capital, poaching executive talent from Google and setting up shop in 450 cities.
But a series of crises this year has rocked the company and shaken Kalanick to his core, according to people who know him.
In February, a female engineer wrote a blog post about a traumatizing experience of sexual harassment and retaliation from the company’s human resources department. After the post went viral, Kalanick apologized and hired former Atty. Gen. Eric H. Holder Jr. to investigate the allegations.
Also in February, the company was slammed with a massive trade-secrets lawsuit from its competitor in self-driving cars, Waymo. Waymo, the self-driving car division of Google’s parent company Alphabet Inc., charged Uber and a former Google employee of stealing 14,000 documents detailing Waymo’s proprietary technology. Waymo has requested that a judge temporarily block Uber’s self-driving program for the duration of the lawsuit.
Kalanick seemed to acknowledge the gravity of the growing crisis in a late-February letter to his staff. “I must fundamentally change as a leader and grow up,” he wrote. “This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.”
Dwoskin and Timberg write for the Washington Post.