New York - Uber is under investigation by 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 a year and a
half on the job, according to two people familiar with the matter.
While Spiegler reported to the company’s top lawyer, Uber is searching
for a replacement who would report directly to new CEO Dara Khosrowshahi, one of the people said. The ride-hailing
company faces three major US legal probes.
READ: Uber's new CEO faces daunting fix-it list as crises abound
Federal prosecutors and 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 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 2016,
the people said.
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
The Greyball investigation is being overseen by federal
prosecutors in San Francisco, while the foreign payment case is being
handled out of Justice Department headquarters in Washington.
Matt Kallman, a spokesperson for 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.
Closely held Uber has been beset by legal and regulatory scrutiny
across a range of its practices, contributing to the pressure that
ultimately resulted in the resignation of co-founder and former CEO
Travis Kalanick in June.
READ: Uber CEO resigns from ride-sharing startup
Major early-stage investors in Uber rebelled
against Kalanick’s leadership after a string of controversies, including
its treatment of female employees and drivers.
Khosrowshahi, who was CEO of travel website Expedia, to take over
the helm of the ride-sharing service beginning this week.
READ: Uber’s new CEO projects unity with Kalanick: Fully charged
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.
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