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USD148m penalty for US data breach shows Uber-awful management style.

Publication: 
Peter Lee
chiefofficersnet

California's Attorney General Xavier Becerra and San Francisco's District Attorney George Gascón will host a press conference to announce a USD148 million, multi-state settlement with Uber over a 2016 data breach. That's all a bit prosaic. This is the extraordinary story behind it and it is anything but prosaic. And it is, at least in part, the middle of the beginning of the end, as CEO, of Uber's founder Travis Kalanick.

The action is not, as one might expect, about the data breach itself but instead it's because Uber didn't disclose it when they were required to do so.

Uber has not been a good corporate citizen. As it sought to expand across the world, its commercial tactics raised eyebrows. But it was its approach to law and regulation that really angered governments: Kalanick's attitude was simple - Uber would set up in a country and then argue that it was so important that laws and regulations should be changed to accommodate it. His personal behaviour became a source of embarrassment to the company and examples of workplace culture that included bullying, discrimination and sexual harrassment, it is now held-up in training courses as an example of how not to run a company.

The company's use of data to identify and ban (greyball) users that it thought might be providing intelligence to regulators was designed to isolate those who were investigating the company's operations and business practices. At the top of the pyramid of such tools was the "Greyball" scheme which, according to the New York Times was still operational, mainly outside the USA, in March 2017. The NYT says that the tool was used in Paris, Boston (USA) and Las Vegas and across China, Korea and Australia. In essence, the NYT said, Greyball identified what it considered suspicious users and then fed them false data, automatically accepted then cancelled bookings and generally took steps to encourage them not to use Uber. The NYT article below details startling organised processes to identify enforcement personnel.

There were many areas in which Uber acted either in breach of local laws or facilitated others to do so.

There was much made of the Uber X scheme in the USA which, unlike authorised taxi services, did not require drivers to undergo any form of background checks. Their vehicles were not inspected for safety. Most importantly, Uber X was, in effect, a scheme in which car owners would receive a booking, drive a passenger and then take payment - which is conduct that voids personal car insurance in almost every market in the world. Uber said "not our problem - it's up to the drivers." Injured passengers found themselves trying to get damages out of drivers whose only significant asset was a car that was either damaged or so rubbish in the first place that it had virtually no value.

Across the world, regulators struggled: while the drivers may be operating illegally (the insurance is void for that trip, therefore the driver is driving while uninsured and therefore committing an offence), Uber was not, obviously, involved in illegal activity. It was, in effect, no different to a dating app.

Across the world, Uber drivers were arrested and their cars impounded, fines were levied. Uber cried that this was all protectionism for established taxi businesses and that they were being picked on because they were "disruptors." But that wasn't true. Yes, established taxi companies didn't like Uber but it was by no means the only ride-booking platform (for some reason, it became known as "ride-hailing" but that is exactly what it doesn't do) but the real problem was that Uber was putting the public in contact with those who did not have the required approvals.

Uber also became embroiled in an IP legal battle with Waymo, a self-driving car company related to Google. And it had long struggle with Lyft, which has not made a significant break-out from California but is the darling of Los Angelenos.

Uber has announced self-driving cars (at least one crashed causing the death of a pedestrian) and Arizona has ordered the cars off the state's streets. After another crash, the company pulled its cars out of Pittsburgh. In May this year, the company said it would not apply to renew its test permit for California. Techrada reported "the early months were full of light collisions and traffic" offences. That's not stopped them declaring that they intend to launch self-flying taxis in scaled up versions of toy drones. The media carries frequent stories about its plans including a supposed 20 million Euro plant in France.

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