Uber's legal woes mount as spyware comes under probe

NEW YORK • Uber Technologies is under investigation by the federal authorities in New York for its alleged use of a spyware program designed to undermine competition for its digital ride-hailing service, according to people familiar with the matter.

The executive charged with making sure Uber follows the law, global head of compliance Joseph Spiegler, resigned last week after 11/2 years on the job, according to two people familiar with the matter.

While Mr Spiegler reported to the company's top lawyer, Uber is searching for a replacement who would report directly to new chief executive Dara Khosrowshahi, one of the people said.

The ride-hailing company faces three major legal probes in the United States.

Federal prosecutors and Federal Bureau of Investigation (FBI) agents in Manhattan have been investigating a program nicknamed "Hell" at Uber that allegedly allowed the company to spy on drivers from competing service Lyft, according to the people. The spyware program was said to identify drivers who worked for both companies and targeted them with cash incentives to shift their allegiance to Uber. The program was allegedly used from 2014 to last year, the people said.

The US authorities are already investigating the company on two other fronts: another program nicknamed "Greyball" that was allegedly used to deceive regulators about its operations; and possible violations of the Foreign Corrupt Practices Act, which bans payments of bribes to foreign officials.

The Greyball investigation is being overseen by federal prosecutors in San Francisco, while the foreign payment case is being handled by the Justice Department in Washington.

Mr Matt Kallman, a spokesman for the San Francisco-based Uber, said the company is cooperating with the investigation, and the Hell program is no longer being used. Representatives for the FBI and acting US Attorney Joon Kim in Manhattan declined to comment on the probe.

Lyft drivers filed a class-action lawsuit against Uber over the Hell program in San Francisco federal court in April. A judge granted Uber's request to dismiss the case last month, but allowed it to be revised and refiled.

News of the New York investigation into Uber's practices was reported earlier by The Wall Street Journal.

Uber has been beset by legal and regulatory woes, contributing to the pressure that ultimately led to the resignation of co-founder and then chief executive Travis Kalanick in June. Major early-stage investors in Uber had rebelled against Mr Kalanick's leadership after a string of controversies.

Uber hired Mr Khosrowshahi, who was chief executive of travel website Expedia, to take over the helm of the ride-sharing service beginning last week.

Mr Khosrowshahi has said he plans to draft a new set of core values for the company and hopes to clean up its troubles to ready it for a public offering, possibly in 2019.

BLOOMBERG

A version of this article appeared in the print edition of The Sunday Times on September 10, 2017, with the headline 'Uber's legal woes mount as spyware comes under probe'. Print Edition | Subscribe