Can Uber survive?

The NMA Foundation presents The Car of the Future weekly feature:

For last two weeks, Uber has been in hot water from nearly every quadrant.  As outlined in a June 25, 2017 Car of the Future blog post Is the Party Over for Uber? I asked a similar question about company survival since the founder Travis Kalanick had just been ousted by the board. Allegations of pervasive sexual harassment, driver harassment and misconduct, local official harassment and various lawsuits pervaded the company then (and still does to an extent). Now what’s happening to the company seems to be putting Uber into a free fall without a parachute.

Everyone seemed a bit hopeful after new CEO Dara Khosrowshahi entered the picture earlier this fall. The question on all the critics’ minds was Could Khosrowshahi turn this sinking ship around?

In early November, Khosrowshahi said in his first interview since taking the helm that he was planning on taking Uber public in 2019? He also announced to his staff that Uber would become more customer centric and that, “We do the right thing. Period.”

Uber also announced in early November that Los Angeles would become the third city to test flying cars by 2020 as part of an aerial taxi service. Los Angeles would join Dallas-Fort Worth and Dubai in the testing phase. Their partner on this project will be NASA.

Also, last week Uber announced a $1 billion dollar deal to buy 24,000 Volvo driverless cars. Uber has been driving the charge on driverless ridesharing and has finally made a commitment to eliminate partner drivers—not making core contractors very happy since they will lose their jobs.

Flying cars and driverless cars are all fun and games and makes Uber looks as if they are the future maker as they always have been. But I am not so sure the company can survive the newest developments that will be expensive, make investors nervous and thrust Uber into the spotlight again as one of the worst companies anywhere.

In the third quarter of this year, Uber lost $1.5 billion in revenue. In the second quarter of 2017, the loss was $1.1 billion. In contrast, Uber lost only $2.8 billion in all of 2016. Despite all this, Uber’s gross bookings continue to grow from $8.7 billion in this year’s second quarter to $9.7 billion in the third.  Due to all the previous money thrown at the feet of this disruptor, Uber had $6.6 billion in cash on hand at the start of the third quarter and could continue to lose money at this rate for another year. Two years ago, Uber was valued at $68 billion dollars despite the fact that the company has never turned a profit. Uber has raised a total of $11 billion and is currently negotiating with Softbank to raise another billion more.

Perhaps one of the reasons Uber is losing money has to do with the fact that other companies, states and countries are suing or fining Uber over so many different things.

On November 20, 2017, Colorado Public Utilities Commission officials announced an $8.9 million penalty for allowing 57 people with criminal or motor vehicle offenses to drive for Uber. A number of reports have surfaced across the world that drivers have not been vetted properly causing some passengers to be hurt by driver criminal behavior. This was just one of the problems that London officials told Uber earlier this year was the reason the ride hailing company would not be welcome to operate in their city any longer.

Right before Thanksgiving, Uber acknowledged a data breach that occurred in October 2016 that involved names, email addresses and phone numbers of 57 million customers worldwide. What’s even worse, former CEO Kalanick was told about the breach at the time and instead of reporting the breach as required by state laws, the company decided to give the hackers $100,000 to give up the data and remain quiet. Two members of Uber’s security team have recently been fired due to the hack cover up. Uber covered up an earlier hack in 2014 and did not come clean for six months which resulted in a $20,000 fine from the state of New York and ongoing hearings with the Federal Trade Commission.

This time though, the company won’t get so much of a pass. The Washington State Attorney General has already filed a lawsuit about the breach. Chicago and Cook County, Illinois are not too far behind as well as many other states and countries soon to follow suit.

On Monday of this week, five U.S. Senators asked Uber to account for this data breach and more than likely company officials will have to answer soon enough.

Probably the worst thing to happen to Uber recently though are spy allegations brought by federal prosecutors in the pre-trial phase of the Waymo lawsuit against Uber for stealing trade secrets.

In San Francisco earlier this week Judge William Alsup delayed the trial indefinitely after it was revealed that Uber had withheld evidence among other things. Robert Jacobs, former Uber manager of global intelligence, had sent a 37-page letter to Uber’s in-house attorney after he left Uber in April 2017 that was not provided by Uber as part of legal discovery before the trial.

Even though Jacobs was only the manager for just over a year from March 2016 until April 2017, the letter detailed his concerns about potentially criminal or unethical activities within Uber’s strategic services group and the marketplace analysis team.

Federal prosecutors, who are conducting a separate investigation, discovered the Jacobs letter plus the fact that Uber employees were using non-attributable devices to communicate away from the company servers and using encrypted messaging apps such as Wickr to communicate internally.

Another question that Uber is desperate to resolve (hence the agreement to purchase $1 billion worth of Volvo driverless cars) is the idea of whether or not the company is an app/tech company or a transportation company and whether or not drivers are contractors or employees. A European Union court advisor told France in July that it was entitled to charge Uber with running an illegal taxi service.  London also has the same question which is yet another reason the city told Uber to leave the city.

Can Uber survive the newest string of problems?

Editorials have been generally quite unkind.

Bloomberg news said that Uber’s big problem is its culture of dishonesty and the company should do more to give up its cheating ways. asked the question, Will Uber’s Data Breach Cover-up be the Final Straw for its Most Loyal Users? gave an even more provocative viewpoint: 6 Ways the World would improve if Uber died today.

As the unicorn and mighty transportation disruptor, Uber certainly has many outstanding rideshare companies nipping at its heels.  The big question that remains—will passengers remain loyal to a company that has such a bad reputation with so many problems?

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