Since its inception in 2009, Uber has had a controversial history of violent conflicts between drivers to a secret software that was allegedly used to evade law enforcement† Now more than 124,000 documents are leaking dubbed the Uber files shows how far the company under co-founder and former CEO Travis Kalanick took advantage of that chaos to expand into 40 countries. Mine research explores the relationship between Uber and the state. The company’s strategy to grow at all costs was uneven, shaped and slowed by changing regulations in different markets. In recent years, Uber appears to have toned down its approach and halted some of the more aggressive activities described in the leaks. But in my opinion, the strategy underlying the company’s success means that it will always violate the laws where it operates.
The Uber files reportedly show that the company had a well-considered strategy to violate or ignore the law and was well aware of it. Uber’s original service — citizens driving other citizens in their private cars without any sort of permit or license — tended to be in a gray legal area. In emails, executives joked that they were “pirates” and that the company’s model was “just fucking illegal” when it faced legal opposition from entering new markets.
The leaked documents also reveal the role that lobbying and relations with politician friends played in Uber’s success. The company hired powerful lobbyists, many of them former members or employees of national governments, who promised to end the revolving doors between politics and industry. Meetings with politicians included then-French Economy Minister (and now President) Emmanuel Macron and then-Mayor of Hamburg (and now Chancellor of Germany) Olaf Scholz.
Embracing the chaos reportedly also included endangering the company’s drivers. Almost everywhere Uber landed, taxi unions staged protests that could turn violent at times. Reports in the Uber files show Kalanick believed that Uber drivers attending a taxi driver protest in France were “worth it” as “guarantee of violence”[s] good luck”.
Uber also reportedly had a “kill switch,” a technology tool to prevent authorities from accessing Uber’s data when they invade its offices.
The company has made efforts to distance itself from the allegations in the Uber files. A statement published by the company attributes the contents of the leaks to the Kalanick era and highlights the change in leadership and values.
Meanwhile, the spokesperson for Kalanick said that Uber’s expansion approach was not its own doing, but instead “under the direct supervision and full approval of Uber’s robust legal, policy and compliance groups”.
What has (and hasn’t) changed?
This chaos strategy has demonstrably worked. Uber is now a $43 billion (£36 billion) company and its drivers make about 19 million trips per day. Yet it still struggles with profitability and aggressive competitors.
In 2017, Kalanick stepped down and was replaced as CEO by Dara Khosrowshahi. Most of the leadership has since changed as well. Accusations about a workplace culture of harassment and sexism seem to have dried up.
The company has generally moved from its original service to one where licensed drivers use vehicles with specific permits to hail passengers (in other words, a taxi for the smartphone age), and introduced a food delivery wing, Uber Eats. It’s also taken a calmer and more polite approach to expansion – move slower, break fewer things.
Let me give you two examples: Uber entered Madrid in 2014 without taking into account a Spanish law requiring companies and drivers to have a specific driver’s license. It entered Berlin the same year, in violation of German competition laws. The company was banned, left both cities and later returned in accordance with existing regulations.
Addressing German expansion in 2018, Khosrowshahi admitted that: Uber’s approach backfired, and pledged to grow responsibly. Similarly, when speaking about the experience in Spain, Carles Lloret, Uber’s CEO for Southern Europe, acknowledged that “it was a mistake to replicate the American model — more liberally — without taking into account the Spanish context†
And yet some things have remained the same. The company faces multiple lawsuits, most over whether its employees qualify as employees, and its profitability remains an open question. As I explain in my researchthese two things can be explained by the company’s fundamental strategy: that of ‘controversial compliance’.
Uber is adapting to existing rules, but only as little as is necessary to provide its services. Meanwhile, it continues to fight legislation everywhere – spending billions on lobbying and making political connections – to bring existing rules closer to its preferences.
Uber executives know that their business model may not be sustainable, even less so if they are forced to classify employees as employees and pay for related rights and benefits. Fighting regulation is a survival strategy.
They have a preferred model in mind – as close to their original model as possible. While they no longer openly break laws, they continue to push for their preferential rules through the courts or finding loopholes.
In a memo recently sent to employees and leaked to the press Khosrowshahi wrote, “We’ll be even more hardcore across the board about the cost.” The company knows that if it is necessary to reclassify drivers as employees (such as, for example, the UK Supreme Court has ruled) the financial situation will be even worse.
Aside from another blemish on its reputation, Uber has very real problems. Profitability may be the most urgent for the business, but for our society there is a much more important one.
Apps like Uber and the hundreds that followed promised innovation. Instead, they have presented a thinly veiled version of the exploitation and corruption that has always characterized capitalism. Given the allegations in the Uber files, one also has to wonder if there will ever be consequences for tech entrepreneurs with a penchant for breaking rules.
This article by Jimena ValdezLecturer in Comparative Politics, City, University of London has been reissued from The conversation under a Creative Commons license. Read the original article†