Buzz
Last week, one of the lesser-discussed events in the tech world was Uber's profile. It got drowned out amid a plethora of other information, with the most notable being the launch of the MacBook Air equipped with the M2 chip, and the Twitter drama dragging Elon Musk to court to finalize the $44 billion social media acquisition deal.Of course, that doesn't mean we can overlook the leaking of over 124,000 internal Uber documents sent to The Guardian of the UK. Through these invaluable documents, everyone has seen clearly how Uber expanded its connections to lobby government officials in many countries, enabling its operations in numerous major nations, sometimes against local laws.
Accompanying these are scandals straight out of a movie, such as the secret 'kill switch' to obstruct investigative agencies from accessing data on Uber's servers, tax evasion, or disregarding the safety of both passengers and drivers.To cover the entire Uber dossier would likely require a lengthy, detailed, and twist-filled series, much like the approach taken by The Guardian or The Washington Post last week. I'll do my best to summarize the main points that the journalists at the ICIJ (International Consortium of Investigative Journalists) worked on to turn hundreds of thousands of documents in the Uber dossier into useful information for readers. Through this, we can better understand how Uber broke the law in many countries, ultimately aiming to dominate the tech ride-hailing market.Who Leaked the Massive Information?
The individual who supplied 18.69 GB of Uber's internal data to The Guardian is Mark MacGann, the head of Uber's lobbying department in the European market. Over 124,000 documents, including emails, messages, and internal company data. The 52-year-old Irishman served as Uber's lobbyist from 2014 to 2016, engaging with governments and parliaments across Europe, the Middle East, and Africa.This person is responsible for managing Uber's wildly aggressive global expansion process, where the startup violated traffic laws in many countries. Five years after resigning, MacGann decided to speak out to expose Uber's serious wrongdoing.He told The Guardian that from lobbying governments to change laws in favor of Uber to defending those actions as being 'for the financial benefit of drivers,' it was all deceitful.'In most countries where I worked for Uber, the law prohibits the existence and operation of such a ride-hailing service. Uber's modus operandi is simple: no need for permission, just operate, run fast, recruit drivers, do marketing, and people will quickly realize how amazing Uber is.'
By publicly disclosing the company's confidential data, MacGann also admitted his role in carrying out what he openly admits to be illegal activities: 'I also bear some responsibility. When I was there, I was the one working with governments, I was the one working with the media, and I was also the one sitting in the meetings when they discussed installing switches to disable data access in the servers, and I was the one saying that the laws should be changed because drivers would benefit, and everyone would have more economic opportunities.'Lobbying, Playing with Presidents
In mid-2015, taxi drivers in France staged protests and strikes in Marseille. They set fires, overturned cars, blocked roads to train stations and airports. The focal point of this protest was opposition to the Uber ride-hailing app. Taxi drivers argued that Uber was breaking the law in France and threatening the livelihoods of taxi drivers. Following clashes between taxi drivers and Uber drivers, on October 20, 2015, France temporarily suspended Uber's ride-hailing service. To resolve this, Mark MacGann sought the help of a young politician, then France's Minister of Economy, Industry, and Digital Affairs: Emmanuel Macron.
Just a few hours after MacGann contacted Macron, France announced the end of the Uber ban. This was just one of dozens of contacts with government officials around the world for Uber to defend its position in lucrative global markets.
Similarly, in the Netherlands, then Prime Minister Mark Rutte directly messaged CEO Travis Kalanick: 'Right now, people see you guys as too aggressive. Change how people perceive Uber by focusing on the positives. It will help improve your image in everyone's eyes.'The fierceness here lies in Uber's headlong rush into new markets even before government approval. Uber's aggression has made its drivers targets of anger from traditional taxi drivers even before the authorities sanctioned its operations. Traditional taxi factions see their industry under serious threat from law-unabiding competitors. From Europe to Asia to South America, many Uber drivers have been attacked and their cars set on fire.
At the 2016 World Economic Forum in Davos, Switzerland, then US Vice President Joe Biden sought a meeting with Kalanick. Biden was late, and Kalanick messaged a colleague: 'I told him one minute late and he gets a minute less with me.'When Biden arrived, Kalanick launched into his familiar sales pitch about Uber's ride-hailing service, how the startup was transforming cities, and how it was improving people's lives. It's said that Biden was impressed enough by this pitch that the US Vice President revised his speech at Davos. This was one of over 100 meetings between Uber executives and government officials from 2014 to 2016.Investor money burning to lure drivers and 'buy revenue'
Abdurzak Hadi, an Uber driver in the UK, left his homeland of Somalia for asylum in the UK as a teenager, and at the age of 44, he quit his taxi job to sign up as an Uber driver. Initially, Uber offered huge bonuses to drivers, and £50 for any passenger who successfully referred friends to become drivers. They used billions of dollars from investors to compete with rivals and attract drivers, thereby dominating the ride-hailing market.But soon, Hadi's earnings dwindled. The more Uber cars there were, the longer the wait times between Hadi's rides became. Then they increased the fee they charged drivers from 20 to 25%. There were times when Hadi estimated he had to work 14 hours straight just to earn the amount he used to make in just 5 hours at the beginning. By 2015, Hadi found his income so low that his family could qualify for government benefits.
The glorious 'honeymoon period' between Hadi and Uber was a result of the startup burning a lot of money to stimulate growth in strategic markets, and just when Uber felt it didn't need to anymore, drivers' incomes plummeted.
An internal Uber presentation vividly describes this issue:- In October 2014 in Madrid, an Uber driver was paid $17.50 per hour, while the fare users paid was only half of that, $9.10.
- In Berlin, drivers earned $10.20 per hour, while the fare was $2.20 per hour.
This strategy is called 'cutting burning money,' in the words of Uber executives. Applying pricing policies and manipulating drivers indirectly forces them to work more is at the core of Uber's business model. Attempting to turn Uber drivers into 'independent partners' rather than Uber 'employees' has allowed them to push all responsibility, costs, and risks in the transportation service onto the drivers. Fortunately, courts in many countries have recognized this, determining that Uber controls drivers, thus they are Uber 'employees'.
From the sweet, honeymoon period, many Uber drivers gradually feel imprisoned when their earnings are not enough to support their families.Paying academics to write studies beneficial to Uber
In addition to lobbying and working with heads of state, from 2014 to 2015, when Uber was targeted by authorities in many countries for regulation, the startup poured tons of money into academic researchers to produce economic studies, using Uber-provided data to paint a more favorable picture for them. At times, Uber poured hundreds of thousands of dollars into scientists and think tanks to create scientific studies that, while appearing neutral, often deliberately targeted how Uber 'creates countless positive jobs for everyone', 'provides affordable transportation solutions for users', and 'enhances labor productivity.'
Subsequently, these studies are sent to politicians and the media for them to make decisions favoring Uber.
For example, in France, Professor Augustin Landier from Toulouse School of Economics was paid 100,000 Euros to produce a report 'usable for direct promotion to demonstrate the positive economic role of Uber.' Similarly, David Thesmar from another prestigious business school in France, École des Hautes Études Commerciales de Paris, received similar payments. Such reports generate positive lines like 'most drivers earn over 20 Euros an hour, more than double the minimum wage' in articles by the Financial Times.Switch to block police data access
Within Uber's internal emails, the company's personnel are well aware of their operations being illegal in many countries, such as Turkey, South Africa, Spain, the Czech Republic, Sweden, France, Germany, and Russia. Across the globe, police, transportation officials, and regulatory agencies are trying to manage Uber. In many cities, regulatory agencies download the app to order rides. Upon arrival, they proceed to fine unauthorized passenger pickups and seize vehicles. Uber offices in many countries are being raided by the police.
To address this issue, Uber developed a sophisticated solution called the “kill switch.” When Uber offices are raided, Uber executives send messages instructing IT specialists to cut off access and retrieve data from the main data system, thereby preventing authorities from gathering information. At least 12 “kill switch” activations have occurred during raids in France, the Netherlands, Belgium, India, Hungary, and Romania.
Uber spokesperson stated that this technique is approved by Uber's attorneys and it is not an obstruction of law enforcement investigations.
Meanwhile, Uber also relies on phone data they collect to identify government officials' devices seeking to fine rides. They update the Uber app versions on those phones to request rides, but all are virtual rides with no actual vehicles arriving for officials to fine. This solution is called Greyball, and it's deployed in many countries and cities, such as Boston, Paris, Las Vegas, Australia, China, and South Korea.Tax Evasion
There was an incident where Uber's director in the UK, Fraser Robinson, was asked to relocate to Amsterdam to deceive the UK tax authorities that Uber had no management personnel within the UK territory. UK law requires taxation if there are management personnel in the UK, Robinson refused due to family reasons, and resigned.Ignoring Driver and Passenger Safety
Not all money-burning strategies to recruit drivers and lobbying efforts are successful for Uber everywhere. While they succeed in stimulating governments to rewrite laws in their favor in some places, in others, Uber drivers are targeted by taxi unions, sometimes operating in extremely opaque ways, and become victims of violence.
When Uber launched operations in India, Uber executives in Asia instructed the Uber executives in India to focus solely on growth. Kalanick once said this: “Embrace the chaos. That means you're doing something meaningful.” Even when protests and riots erupted in France, Kalanick even ordered Uber France to retaliate by rallying Uber drivers together to strike back: “I think it's worth it. Violence leads to success. And those guys have to fight back against opposition, right?”
In other words, Uber is willing to deploy drivers to work for them in violent areas to achieve favorable outcomes for the startup. This happened so much to the point that a former Uber executive said they had a formula to turn drivers into weapons, thus achieving their goals. This strategy has been applied in Italy, Belgium, Spain, Switzerland, and the Netherlands.
When Uber drivers in the Netherlands were attacked by strangers posing as taxi drivers in Amsterdam in March 2015, Uber staff urged drivers to report to the police, then shared that information with De Telegraaf newspaper. A director wrote: “We let the violence unfold for a few days, then come up with a solution.” They leverage violence to pressure the government, forcing the Netherlands to rewrite laws favorable to Uber.
On December 5, 2014, a Uber passenger was assaulted in a vehicle in New Delhi, India. Following that, Uber had to temporarily halt operations, followed by temporary operations through a subsidiary in India. Also in this South Asian market, Uber faced troubles with banks, tax authorities, and consumer protection courts. It's from here that the kill switch solution was implemented to prevent authorities from collecting data from Uber's servers.
According to ICIJ, Guardian, Washington Post
