In the latest public relations fiasco to hit Unicorn champion Uber (the company remains the most valuable private company in the world at a valuation of $68 billion), just days after it emerged that the company was allegedly engaged in sexual harassment according to a disgruntled employee, and shortly after a video leaked showing Uber CEO having a meltdown while being driven in one of his own vehicles, the NYT reports, citing current and former employees, that Uber has for years engaged in a program to deceive authorities in markets where its service was being resisted or banned by law enforcement.
Uber reportedly used a tool, called Greyball, which uses data collected from Uber’s app and other techniques to identify and circumvent officials. The car-hailing company used these to evade authorities in cities such as Paris, Boston and Las Vegas, and in countries including Australia, China, South Korea and Italy. "Greyball" was part of a broader 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 VTOS program, including the Greyball tool, began as early as 2014 and remains in use today, predominantly outside the United States. Making matters worse, the NYT reports that Greyball was approved by Uber’s legal team, which will likely result in significant litigation once the story is absorbed.
The first known use of Uber's Greyball was recorded on video in late 2014, when Erich England, a code enforcement inspector for Portland, Ore., tried to catch an Uber car downtown as part of a sting operation against the company.
Here is the punchline: 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 the miniature vehicles on the screen wound their way toward him.
But unknown to Mr. England and other authorities, some of the digital cars they saw in their Uber apps were never there at all. 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 its app and through other techniques. Uber then served up a fake version of its app that was populated with ghost cars, to evade capture.
In retrospect this does not appear to have been a very prudently thought out strategy: all one would need to do is change their host smartphone, and Uber would lose track of the designated target, while being exposed to the reputation-tarnishing career risks associated with the implementation. That however did not stop management or legal from going ahead with it.
The Greyball tool underscores the lengths to which the company will go to win in its business. Uber has long flouted laws and regulations to gain an edge against entrenched transportation providers, a modus operandi that has helped propel the company into more than 70 countries and to a valuation close to $70 billion.
Yet using its app to identify and sidestep authorities in places where regulators said the company was breaking the law goes further in skirting ethical lines — and potentially legal ones, too. Inside Uber, some of those who knew about the VTOS program and how the Greyball tool was being used were troubled by it. Instead, as the NYT adds, the Greyball tool underscored "the lengths to which the company will go to win in its business. Uber has long flouted laws and regulations to gain an edge against entrenched transportation providers, a modus operandi that has helped propel the company into more than 70 countries and to a valuation close to $70 billion."
Yet using its app to identify and sidestep authorities in places where regulators said the company was breaking the law goes further in skirting ethical lines — and potentially legal ones, too. Inside Uber, some of those who knew about the VTOS program and how the Greyball tool was being used were troubled by it.
In a statement, Uber said, “This program denies ride requests to users who are violating our terms of service — whether that’s people aiming to physically harm drivers, competitors looking to disrupt our operations, or opponents who collude with officials on secret ‘stings’ meant to entrap drivers.”
To be sure, legal challenges are already being prepared: Dylan Rivera, a spokesman for the Portland Bureau of Transportation, said in a statement: “We’re very concerned to hear that this practice continued at least into 2015 and affected other cities. “We take any effort to undermine our efforts to protect the public very seriously,” Mr. Rivera said. Of particular focus to Rivera and other officials is the company's UberX service:
Uber, which lets people hail rides from a smartphone app, operates multiple kinds of services, including a luxury Black Car one in which drivers are commercially licensed. But one Uber service that many regulators have had problems with is the company’s lower-cost service, known as UberX in the United States. UberX essentially lets people who have passed a cursory background check and vehicle inspection to become an Uber driver quickly. In the past, many cities banned the service and declared it illegal.
That’s because the ability to summon a noncommercial driver — which is how UberX drivers who use their private vehicles are typically categorized — often had no regulations around it. When Uber barreled into new markets, it capitalized on the lack of rules to quickly enlist UberX drivers, who were not commercially licensed, and put them to work before local regulators could prohibit them from doing so.
Bottom line, UberX broke the law, and in order to avoid long legal battles, the company deployed the VTOS program and aforementioned Greyball tool. "When Uber moved into a new city, it appointed a general manager to lead the charge. The manager would try to spot enforcement officers using a set of technologies and techniques."
Uber would then deploy a sophisticated - if hardly foolproof - means of tagging potential enforcement officials which included tagging "the cheapest mobile phones on sale, which were often the ones bought by city officials, whose budgets were not sizable", "looking at the user’s credit card information and whether that card was tied directly to an institution like a police credit union." Uber also The company watched which people frequently opened and closed the app, a process internally called “eyeballing”, around that location, which signified that the user might be associated with city agencies.
Once tagged, the suspected "adversary" would then be shadowbanned on every attempt to hail a ride: "When a tagged officer called a car, Uber could scramble a set of ghost cars inside a fake version of the app for that person, or show no cars available at all. If a driver accidentally picked up an officer, Uber occasionally called the driver with instructions to end the ride.
Meanwhile, Uber employees have defended the practices, saying the tools were partly born out of safety measures for drivers in certain countries. In France, Kenya and India, for instance, taxi companies and workers targeted and attacked new Uber drivers.
Alas, we doubt that excuse will work in court especially since at least 50 to 60 people inside Uber knew about Greyball, and some had qualms about whether it was ethical or legal. Greyball was approved by Uber’s legal team, headed by Salle Yoo, the general counsel, the NYT reports. Ryan Graves, an early hire who became senior vice president of global operations and a board member, was also aware of the program.
Outside scholars said they were unsure of the program’s legality. Greyball could be considered a violation of the federal Computer Fraud and Abuse Act, or possibly intentional obstruction of justice, depending on local laws and jurisdictions, said Peter Henning, a law professor at Wayne State University, who also writes for The New York Times.
“With any type of systematic thwarting of the law, you’re flirting with disaster,” Mr. Henning said. “We all take our foot off the gas when we see the police car at the intersection up ahead, and there’s nothing wrong with that. But this goes far beyond avoiding a speed trap.”
As the NYT concludes, Greyballing has been effective to date: "In Portland that day in late 2014, Mr. England, the enforcement officer, did not catch an Uber, according to local reports. And two weeks after Uber began dispatching drivers in that city, the company reached an agreement with local officials for UberX to be legally available there."
While the report may lead to a legal onslaught at the cash cow company by strapped municipalities, the bigger question is what else will emerge, now that such formerly tech-supportive outlets as the NYT are posting openly antagonistic articles based on disgruntled Uber whistleblowers; in any event, with Uber's "hip" reputation suddenly in tatters, one wonders what impact it will have on the company's eventual IPO plans, if any.