Uber tried defying one government authority too many when it started messing with the police.
In March, the New York Times broke the underlying story regarding the software program designed to defy government investigators and regulators, including police. Uber said it would stop using the program after it received a barrage of negative press. From a more recent New York Times account:
The program, involving a tool called Greyball, uses data collected from the Uber app and other techniques to identify and circumvent officials who were trying to clamp down on the ride-hailing service. Uber used these methods to evade the authorities in cities like Boston, Paris and Las Vegas, and in countries like Australia, China and South Korea.
Greyball was part of a program called VTOS, short for “violation of terms of service,” which Uber created to root out people it thought were using or targeting its service improperly. The program, including Greyball, began as early as 2014 and remains in use, predominantly outside the United States. Greyball was approved by Uber’s legal team.
Uber’s use of Greyball was recorded on video in late 2014, when Erich England, a code enforcement inspector in Portland, Ore., tried to hail an Uber car downtown in a sting operation against the company.
At the time, Uber had just started its ride-hailing service in Portland without seeking permission from the city, which later declared the service illegal. To build a case against the company, officers like Mr. England posed as riders, opening the Uber app to hail a car and watching as miniature vehicles on the screen made their way toward the potential fares.
But unknown to Mr. England and other authorities, some of the digital cars they saw in the app did not represent actual vehicles. And the Uber drivers they were able to hail also quickly canceled. That was because Uber had tagged Mr. England and his colleagues — essentially Greyballing them as city officials — based on data collected from the app and in other ways. The company then served up a fake version of the app, populated with ghost cars, to evade capture.
Uber, in its characteristic self-aggrandizing way, tried to justify its use of the program as a necessary competitive move, to defend itself against evil forces that were manipulating police (listen to the video in the linked New York Times story to hear the spin). Help me.
The criminal investigation is in its early stages. Reuters broke the story. The gloves are off:
The U.S. Department of Justice has begun a criminal investigation into Uber Technologies Inc’s use of a software tool that helped its drivers evade local transportation regulators…
An Uber spokesman and the Justice Department declined to comment. Uber lawyers said in letters to Portland authorities, which Portland made public in a report last week, that the Greyball technology was used ”exceedingly sparingly” in that city, before the service was approved there in 2015.
The nature of any potential federal criminal violation, and the likelihood of anyone being charged, is unclear. The investigation is still in its early stages, the sources said.
Bloomberg news service reported the existence of a federal probe last week, but did not identify it as criminal
Uber received a subpoena from a Northern California grand jury seeking documents concerning how the software tool functioned and where it was deployed…
A subpoena from a grand jury is a formal request for documents or testimony concerning a potential crime.
Reuters intimates that a grand jury has actually been empaneled. Note that confusingly, there are also “grand jury subpoenas” that are issued at earlier stages of investigations. However, a Wall Street Journal source did say a grand jury had been convened: “A federal grand jury recently sent Uber a subpoena requesting records related to the software, this person said.”. This is a big deal.
Here is an overview from Reuters of some of the key issues:
The program was part of a broader Uber system, called Violation of Terms of Service, that analyzed credit card, device identification, location data and other factors to predict whether a request for a ride was legitimate, current and former employees said.
The technology was used partly to prevent fraud and protect drivers from harm, the company blog post said. If a ride request was deemed illegitimate, Uber’s app showed bogus information and the requester would not be picked up, the employees told Reuters.
However, the Greyball technique was also used against suspected local officials who could have been looking to fine drivers, impound cars or otherwise prevent Uber from operating, the employees said.
The system might have gone farther than suggested by Uber’s terms of service for app users. For example, it mined credit card information to see if the owner was affiliated with a credit union used by police and checked social media profiles to assess the likelihood that the person was in law enforcement.
After the Times exposed the program in March, regulators who had been unable to catch Uber in places where it was banned accused the company of obstructing their inquiries
It is also not a good sign that Uber has hired a big name law firm, Shearman & Sterling, to conduct an internal investigation. That says the integrity of management is in doubt. A move like this is almost certain to have come from the board, not the CEO Travis Kalanick.
I guarantee that Uber has a bogus metric to justify its use of the “exceedingly sparingly” claim, which it made in response to a Portland civil lawsuit, like number of hours of misleading information shown relative to total hours available by Uber registered drivers. Marketwatch said Uber stated it used the program 17 times in December 2014 in Portland in a letter to the city. Given Uber’s track record, I wouldn’t trust anything it says outside a formal legal process where it is liable for the accuracy of its information. Not surprisingly, Reuters suggests the numbers are larger:
Transportation officials in Portland investigated and reported last week that Uber had used Greyball to evade 16 Portland Bureau of Transportation officials, denying them dozens of rides, in December 2014…
Let’s hope the Feds keep the hot lights on Uber. Couldn’t happen to a nicer bunch.