Uber Settles Data Breach Investigation

Kate Conger writing for The New York Times regarding Uber paying $148 million to settle a nationwide investigation into a 2016 data breach:

“Tony West, Uber’s chief legal officer, said the settlement was part of a larger effort inside Uber to remake the company’s image. He said the company had recently hired a chief privacy officer and a chief trust and security officer.”

As companies like Uber and Facebook have been rocked from one scandal to the next it is evident that security and privacy should be ingrained into company culture from day one. Playing fast and loose with these values might lead to short-term growth, but at what long-term cost?

 

 

Blood in the water

Almost as if on cue, Lyft and Waymo have announced a partnership to bring Waymo’s self-driving technology to Lyft customers. This puts Uber into an increasingly precarious situation. Consider the following:

Costs

Once automated driving is viable for ride-sharing services – the costs will be greatly reduced. This will mean a huge competitive advantage for the service that gets there first. Lyft was a small time player with some minor partnerships in this area and Uber was already testing its own technology on city streets. In essence, Lyft had no real plays in this area. Now they are partnered with arguably the leader in self-driving technology.

Complements

Details of the Lyft/Waymo partnership were not revealed, but it is worth considering that the Lyft/Waymo partnership may mean that Uber is no longer the leader in terms of both ride-sharing and self-driving technology in combination. The importance of this cannot be overstated. Lyft offered no self-driving technology and Waymo did not have a clear line to market access. They complement each other’s needs so well.

Gaining ground

Lyft has recently raised more money and will be looking to capitalise on Uber’s problems by attacking Uber in the US. This is likely to be in terms of a price war. This is a knock against Uber’s budgeting as they now need to burn money competing for rides while funding their own self-driving technology. Lyft has no such needs as they focus all efforts on gaining market share from Uber. All the while Waymo focuses on the self-driving technology. No doubt, with Eric Holder’s report still pending, and the Uber/Waymo lawsuit only just beginning. All bets are off as to who will ultimately capture a market that until very recently seemed destined to be Uber’s.

Route to market

Waymo now has route to market, and likely, is greatly incentivised to capitalise on Uber’s failings. Alphabet, Waymo’s parent company, is no doubt looking for “what’s next” in terms of market opportunities and now, have the possibility to get real skin in the ride-sharing game. Waze has already been piloting ride-sharing initiatives in California, so this partnership is likely to be a big boost to Alphabet’s ride-sharing ambitions.

Data, data, data

While the primary benefit of this partnership is that both Lyft and Waymo now have capabilities in areas they did not previously have, one has to wonder what benefits this will bring to the data being employed? Google’s knowledge of your calendar, your appointments, your travel plans, not to mention your mapping and traffic data means that Google knows where you want to go before Uber does. This could bring significant competitive advantage to Lyft. In some respects, Google may be able to “prime the pump” and predict who needs rides where and when before Uber does.

Snatching defeat from the jaws of victory

Who knows what will happen to Uber next? Uber management seem as likely to destroy the company as help it succeed. At a time when they should be focused on the market, the technology and the opportunities before them, they are fighting significant fires. While they are leagues ahead of competitors in market and mind-share, what happens while their attentions are facing inward rather than outward?

A battle of many fronts

Uber will need to fend off inspired, and continual attack on their current core business of ride-sharing.
At the same time, they will need to conduct an increasingly difficult battle to bring self-driving technology to market. If the lawsuit goes against them, they will be fighting that battle with one hand behind their back.

Considerable lead

Uber’s market leadership is probably considerable, and Lyft does not yet operate outside of the US. As such, Uber is only competing with local players in other markets is likely to not be losing too much ground in those areas as Lyft will still need to enter those markets and build up a customer base. This means that Uber is likely to have some breathing room. Added to that, the partnership between Lyft and Waymo is yet to be proven.

As such, the main questions for Uber are:

  • How can they resolve the Waymo case relatively unscathed and continue moving forward on self-driving?
  • How quickly can management put their problems behind them and get back to focusing on their business?

Needless to say, there is blood in the water and the sharks can smell it.

Uber alles

What will Attorney General Eric Holder’s report reveal about the culture at Uber?

And what effect might the report have not only on the company and its prospects, but on the company’s customers?  

Uber has been in the line of fire this year after numerous reports including, but not limited to, blog posts about sexual harassment, CEO Travis Kalanick shouting at an Uber driver on video, accusations from Alphabet about the alleged theft of intellectual property related to self-driving vehicles, “Greyballing“, circumventing Apple’s App Store policies, visits to brothels and ensuing attempts to cover them up. Even disputes over records for Wii Tennis. To top it all off,  Kalanick has called off his appearance at the Code conference later this month. 

Uber, the service, is fantastic! In my home country, unlike in the USA, there are no real alternatives. Lyft does not operate there, neither do any of Uber’s numerous international competitors. As such, while I have serious misgivings about the company itself, what other ride-app options are there? 

The fact is, if I need a ride, without any meaningful alternatives, I will use Uber because it is the best ride service where I live, regardless of the feelings I have toward the company and its management. Unfortunately, I am sure that many people will feel exactly the same. It seems unlikely that these stories will have a wide scale effect on Uber’s customers.

One can hope that the soon-to-be-released report will lead to re-evaluations and changes in the management team and culture being promoted at Uber. All of these events have happened under the current management’s watch and have resulted in substantial damage to the company image. If I were to consider my own job, if rumours and reports came out about me doing underhanded things and behaving in ways that legitimately threatened the existence of the company, my career would be in serious jeopardy. Is this really the case for Travis Kalanick, Emil Michael, Anthony Levandowski and others at the heart of these controversies? 

It will be interesting to hear what board member Arianna Huffington has to say about it as she replaces Kalanick as a guest at the Code conference, but, I am not sure board members are the problem at the company. 

Peter Kafka writes on Recode about the upcoming report:

Uber’s top executives and board will see it at the very end of May. But the company won’t distribute it to its employees, and explain what its next steps will be, until sometime after that, likely the week of June 5.

I understand that companies need to manage situations like these at the highest levels, but what does a company do when it is the highest levels that are implicated in the damaging events?

To outsiders, Uber looks relatively unchanged from a managerial or cultural perspective. Granted, this may all change once the report comes out. I suspect though, that the real loss for Uber will not be in their image or with their customers in the near term. Rather, these events will have created a sense of blood in the water for their competitors. If the competition was fierce before, the levels are likely to be increased. Where Uber once seemed to be unbeatable, it now seems like they are only ever one controversial step away from scuttling their own ship.