Front Burner - ‘Uber files’ expose a ruthless rise to the top

Episode Date: July 13, 2022

The global rise of Uber's ride-sharing service — and the subsequent crushing of taxi services in many countries — has largely been portrayed as an inevitability. But a trove of 124,000 leaked, confidential documents reveal ruthless dealings inside the company as it expanded across the globe, and suggest that its rise was far more than an organic product of market forces. The "Uber files" — first leaked to the Guardian and then shared with the International Consortium of Investigative Journalists — show how the company broke laws, secretly lobbied governments, and put drivers at risk as it climbed to the top. Today, we're diving into those files with the Washington Post's Doug MacMillan and with CBC reporter Frédéric Zalac, who looked at what the documents expose about Uber's dealings in Canada.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Allie Janes in for Jamie Poisson. So you might remember back around 2015, 2016, there were these massive demonstrations by taxi drivers all around the world who said their livelihoods were being threatened by Uber's aggressive expansion into their countries. There were protests in France, Brazil, Mexico, India, Australia, and here in Canada. Hundreds of taxi drivers sounded their displeasure today with Uber blocking traffic and clogging the downtown core to protest the ride-sharing service. Flash forward to 2022. Uber is practically everywhere. A $43 billion company

with nearly 100 million active users. Uber is so dominant, its name is basically a verb. And the traditional taxi industry that they declared war on is hanging by a thread. Now, a massive trove of leaked documents obtained by The Guardian and shared with the International Consortium of Investigative Journalists shows just how ruthless the company was in its climb. The leaked text messages, emails, and presentations from 2013 to 2017 show the company courting powerful politicians, engaging in aggressive lobbying, showed the company courting powerful politicians, engaging in aggressive lobbying, essentially weaponizing their own drivers and exposing them to violence,

and appearing to knowingly break laws. Here's a company that was willing to break all the rules and use its money and its power to impact, to destroy what they believe to be, to destroy their livelihoods. So they needed somebody to be angry at. They needed somebody to shout at. They needed somebody to shout at. They needed somebody to intimidate, somebody to threaten. I became that person. Mark McGann, a former high-ranking Uber executive, has now publicly identified himself as the source behind the leak.

Today, we're talking to The Washington Post's Doug McMillan, who's been reporting on Uber for years, about the unprecedented leak and what it tells us about Uber's cutthroat playbook. And we'll also hear from our colleague, Frederic Zalac, who is on the CBC team looking at what these files say about Uber's dealings in Canada. Hi, Doug. Thanks so much for being here. Hey, Ellie. So before we dive into the Uber files and pull apart some of the biggest hits in here, I wanted to get your reaction because you've been covering Uber for years.

You exclusively covered this company for the Wall Street Journal during a big chunk of the time that these documents span. So just briefly, how surprised were you by the revelations here? So Uber has been through a lot of controversy in the past. And we know, and I think it's part of the public story around Uber, that this company relied on aggressive tactics to grow around the world and to expand in markets sometimes where it was not welcomed with open arms. There is a considerable dispute going on among traditional black cab drivers. They are protesting against the launch of that Uber app. In Paris, Marseille and Lyon and other cities, airport entrances were blocked and expressways were shut down by burning tires. We don't need some outside foreign company

to come and make their own rules here. This is not how Canada works. Hundreds of taxis strange through the streets of Barcelona as drivers protested against the return of Uber in the city. The thing that stands out is just the candor with which these executives are talking about flaunting local laws and customs.

One of the emails, one of the executives said, we have officially become pirates. Another email, one of the communications executives, you know, basically trying to calm down her colleague and said, you know, you're trying to sleep at night. Just remember, you know, we're just effing illegal. So it's this kind of casual acknowledgement of how much this company was pushing the boundaries of the law and of the drivers who it relied on for its business. And of the drivers who it relied on for its business, there's kind of a casual disregard for some of those people. Getting this kind of very rare look inside of these discussions was pretty eye-opening to me. So why don't we talk first about the drivers, as you noted. I mean, it was already publicly known to some extent that some of Uber's model was not very positive, let's say, for the drivers themselves. But it seems like in these documents, I mean, we gained some real insight about what the company knew about how its tactics might hurt drivers and, you know, what upper management was discussing among themselves about this. So I'd like to look at this in a couple of places,

but why don't we start with Paris, where, like many places in the world, in 2015, 2016, there were these massive protests by taxi drivers, which sometimes turned violent. What do the documents reveal about how uber execs and then ceo travis kalanick handled that yeah this is probably the single most striking document in the whole trove of 124 000 documents that at least the one that we found so far um which is there's a text conversation between travis kalanick as the ceo at the time, and some of his top deputies who were talking about staging a kind of counter protest with Uber customers and Uber drivers.

And they were talking about how they would do this safely and effectively to kind of send a message about the support that existed in France for Uber. a message about the support that existed in France for Uber. And, you know, one of the executives in this text conversation raises the question, well, is this going to be safe? Are we going to potentially put drivers at risk? You know, there had been over the past year, I think, something like 80 Uber drivers involved in incidents of violence being attacked. And, you know, there was a very real risk that by staging an Uber-sponsored endorsed event, that they were potentially going to put some of these people in further risk of harm. And Travis Kalanick, you know, acknowledges that concern. He says, you know, I think this will be a peaceful sit-in. And I think that we want to have safety in numbers. So let's try to

get as many people as possible. But then he says something interesting, which is he said, but if it's not peaceful, that could benefit us as well. And he said, quote, I think it's worth it. Violence guarantees success. And Uber, instead of focusing on the well-being and the safety and worrying about these people who are under risk of physical attack, at least in some of these documents, these conversations that we're now privy to, we're thinking about how do we leverage this for our political gain? And the way that played out was they would sometimes leak the details of these incidents to the media kind of in a hush hush way where they didn't want their fingerprints on it. They kind of wanted, you know,

an incident to show up on the front page of a newspaper so that the taxi industry, who Uber was kind of frequently going up against in these places, was painted in a negative light. You know, moving away from Europe, you also went to Cape Town, South Africa to report on this story. And it seems like South Africa is really illustrative of a lot of promises that the company sold to its drivers. Bolt and Uber drivers are protesting at the front door of the legislature. They're unhappy about the reduced fares and high commissions. Our reporter... This driver you spoke to named Sean Cupido.

Can you tell me about what happened to him? Yeah. So Sean, like many of the Uber drivers, signed up for Uber because they thought that it was going to be a path to kind of a better life for themselves. Uber explicitly said this in many cases. We saw a submission that they made to the South African government where they said that Uber not only creates more jobs, it creates better paying jobs. And they kind of have positioned Uber all over the world as this source of economic empowerment that can help, especially in places

like South Africa, where it has the highest unemployment in the world and highest wage inequality in the entire world. And so Sean was not unemployed. He was previously a factory worker, a former cop, a former bodyguard. And just prior to this, he was a meter taxi driver. But none of these things kind of helped him build a better life for himself. He was still stuck in this very violent, dangerous neighborhood called Manenberg that is currently ruled by gangs. Poverty is playing a big role in our community because if I had the money that can provide my family to be in a better place, then I would have done that. He's a family man. He has three kids. He always wanted to find more safety, you know, find more financial security. And he hoped that Uber was that.

Initially, the money was good. And the fact that he could kind of set his own hours and be his own boss really appealed to him. Uber was like a framework where, you know, you can actually work yourself to a better life. You know, I mean, a lot of people before I joined Uber, the guys that was that was Uber told me, listen, you can make this amount of cash. It's a better way of living. But over time, a few things happened. One is that Uber kind of flooded the market in South Africa with more cars. It encouraged more and more and more drivers to sign up and recruited these people.

and recruited these people and allowed so many cars on the road that Sean tells me that the number of his average trips in a day was cut in half. Instead of doing 14 trips in a day, he's doing seven. And a lot of the time he's just sitting around waiting for a customer. The result of that was Sean started taking more risks and he started working longer hours. He started working 12 plus hours a day. And he started driving in the more dangerous parts of Cape Town. And in many cases, these are neighborhoods that are ruled by gangs and that are frequently where Uber cars are frequently targeted by criminals and by gang members. Another policy that Uber rolled out that made that situation even dicier was that they implemented, we're going to now allow customers in South Africa pay for their

rides in cash. It was unique to South Africa and a few other countries, including Brazil, where Uber saw, you know, one, they wanted to make the service more accessible to more people, but immediately drivers and people all over Cape Town told me that there's an immediate rise in incidents of Uber cars being targeted by criminals. And the most heinous things have happened. Petty robbery had their phones stolen. They are assaulted. There have been incidents where at least two Uber drivers have been set on fire inside their cars. One of them survived and one of them died, according to reports. But this is kind of the reality that these people live in.

And for Sean, that was that was certainly the case. So he ended up being the victim of a robbery. Two men got in his car one night and ended up striking him in the head eight times until he was bleeding and ending up in the hospital with stitches in his head. And, you know, he realized that that night when that happened, that he lost everything, that he lost not only his kind of like his physical possessions, but he lost the ability to drive for a living. He had to take the first job available to him, which was the graveyard shift at a factory. Did Uber compensate him in any way or help him out in any way? So Uber, I asked a lot of questions about this. They declined to comment specifically on his case and this story specifically.

Sean said that they were going to help him out. And he initially asked them to just reimburse him for his broken glasses and his phone. But he said three years later, he's still waiting for them to reimburse him for that. Wow. And so is it evident in these documents in the Uber files that the company knew about how its policies in South Africa could be negatively impacting drivers there? Yes. So the dynamic that we see frequently in these documents and in interviews that I did with managers on the ground in Africa and former executives who worked at Uber's headquarters in San Francisco was that the local managers around the world and places like sub-Saharan Africa were to some extent fighting for the protection of the drivers. It was in their interest to try to make life better for the drivers because they succeeded by getting more drivers on the platform. But the corporate office in San Francisco was frequently sending emails about, we need to make this whole enterprise more profitable.

we need to make this whole enterprise more profitable. And the interesting kind of phrase that one of the top executives used in one of these documents was, we need to burn the burn. And what he meant by that was, Uber is spending a lot of money all around the world and just trying to kind of give drivers and riders these sweeteners and these incentives

to try to make it more attractive for people. Like we need to stop spending so much money in order to make Uber profitable. The next part of this story really has to do with how Uber navigated layers of regulations and administrative headaches as they tried to kind of muscle their way into other countries. So I have to ask you about, and I quote, the pyramid of shit. Briefly, what is the pyramid of shit? Yeah. So there was an image in the documents of a whiteboard, which is just the shape of a pyramid. It's a triangle. It shows all of the litigation that Uber is facing around the world.

And it kind of broke this down in categories where the bottom category is the biggest category, and that's driver lawsuits. There's dozens and dozens of drivers suing the company for various reasons. The next layer up is regulatory investigations, which it showed in France and Spain. They were facing investigations around competition, around labor. And then the very top of the pyramid is direct litigation. And this is civil cases where individuals are suing Uber directly. So, you know, the context here is that the company

is essentially decided to live with this pyramid of crap, to paraphrase you. This is part of their business model is we are going to go into countries where we're not necessarily condoned or legally welcome yet. And we're going to try to expand and get the app and the, and as many customers as possible and get as many drivers behind the wheel as possible. And, you know, their, their, their thinking was if we do that and we succeed in that, then eventually the government will be forced to catch up to us and they'll be forced to pass laws. And so, you know, it goes back to this quote of, you know, we're pirates now. So a lot of that just involves the living with this pyramid of crap and living with the fact that they're going to be sued all the time and they're going to have a very busy legal team kind of, you know, pirate cavalier attitude, they were also doing a lot of like very aggressive lobbying.

So, I mean, to bring it back to France, at the time of the protests and all of that outrage, authorities partially suspended service. So, you know, in an effort to smooth things over, Uber turned to the government. What did they do and who did they cozy up to? The documents show us that one of Uber's closest, most trusted allies in France was Emmanuel Macron. Whilst French taxi drivers protested against Uber, the leak shows Macron championed the country's growth in Paris and was on first-name terms with co-founder Travis Kalanick. This was before he became president. He was actually a minister of the economy. But Uber flagged him and identified him as an important ally in expanding its service in France

and in kind of waging this war against the local taxi industry, where it wasn't clear during this period that Uber was going to be able to coexist alongside the taxi industry because there was so much heated local opposition, you know, not only from the taxi industry itself, but from a lot of people in government. Emmanuel Macron was, you know, I think seen as more friendly to Uber than a lot of other people in government. But the documents show us how close that relationship was. And it came down to there were text messages between top Uber executives and Macron directly. And in some cases, like the one that you just pointed out,

the port city of Marseille banned Uber's ex-service, throwing the company's plans in the country into turmoil. And Mark McGann, Uber's top European lobbyist, who also was the source for the leak of the Uber files, he texts a favor in to Emmanuel Macron and says, you know, what can you do for us? It was, I think, unprecedented in my career to have such easy access to senior members of government, heads of government, heads of state. Basically, the next day, Macron gets back to him and says, I'll look into this, that local authority went back on its banning of UberX and UberX is back on the road. So it just shows you, you know, there was this very concerted effort to cultivate this relationship that does seem to have produced very effective results for Uber in France. This is the one thing that has come up since the Uber files were published as potentially some fallout from these documents. Macron is now facing criticism from mostly from his political opponents at this stage, I think.

So what lessons should one draw from it? Without a doubt, we should address the government and launch a commission of inquiry. That he was on the rise as a politician in France, and he had clearly cultivated this kind of mutually beneficial relationship with a controversial company, a company that, you know, a lot of people in France still see as problematic in the way that it treats its drivers, for example, and problematic in the way that it, you know, had this negative impact on the local taxi industry. I mean, this picture of what they were doing behind the scenes to sort of, you know, get around what they saw as obstacles, like all of these covert schemes and intense lobbying.

How does that differ from the kind of public picture that they were painting at the time? They were positioning themselves as this grassroots movement. They were positioning themselves as this grassroots movement. They were really saying, we are a service that's loved by millions of riders and depended on by millions of drivers. And if you're telling the kind of like governments who stood in their way, if you if you don't allow us into your country and allow us to operate legally in your country, then you're going to be out of step with popular opinion. They sort of pretended as if this would all happen in time on its own. But really what was happening was that Uber was actively lobbying, striking deals in Moscow, lobbying top officials in France and other places in Germany and in India. They cut deals with top media outlets to

try to kind of leverage the influence of major media players in those countries to kind of build their public image. So Uber was very much behind the scenes working to build its image, build a reputation, and to try to just kind of, you know, build alliances with people who it thought could open doors for it. And to some extent, this is not totally unusual for a business that is trying to expand around the world. But there are just kind of these little ways in which Uber appears to be doing this a little bit more aggressively than is normal. And as you say, it's a little bit out of step with the public image that Uber has told about its business. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem.

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That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. In Toronto, if you go back in time, which was the case as well for many other Canadian cities, is that Uber just started operating without having any license for its drivers. So they were operating illegally in many markets in Canada.

So that's my colleague, Frederic Zalac, who's been involved in the international investigation into the Uber files. And he was part of a CBC team looking at the company's dealings in Canada. He spoke to FrontBurner producer, Simi Bassi. And Frederic and his team found that the kinds of tactics that Doug was just describing that Uber was using around the world to lobby politicians and make inroads into cities seemed to have been employed here in Canada too. In November 2014, there was an attempt by the city of Toronto to stop Uber. So they seek to get an injunction against the company. And the same day, a few hours later,

there was a press release that was issued by the newly elected mayor, John Tory, that says, no, that's not the way to go. Uber is here to stay. And what we find out in the leak is that there's an internal email from the policy communications team of Uber, that their policy team worked to secure extremely positive response statement by mayor-elect John Tory. And they basically say that they had a hand

in getting the mayor to say that. Frederic and his colleagues also looked at internal memos that suggested that Uber lobbied the former foreign affairs minister under Prime Minister Stephen Harper, John Baird, possibly with some success. Well, John Baird in 2014 decides to tweet about an experience he says he had with a local cab company. And here I quote, 75 minutes, five calls, no cab. Tonight, I see the need for more competition with Uber. Hashtag Ottawa City. So we've got John Baird here on Twitter and the following day on Facebook, who's calling on the city of Ottawa to basically legalize Uber, who had just the company had just started operating illegally in Ottawa. What's interesting that the leak suggests in the following week, there's an internal email that is sent.

following week, there's an internal email that is sent. And here in that email, we see that that policy team considered that they had in here, I quote, policy secured the foreign minister of Canada as a public endorser. So the leak suggests that there was a contact between Uber's policy team and John Baird. John Baird has answered that he has no recollection of someone from Uber contacting him at the time. Frederic also talked about something called the kill switch, which we'll be getting into in some more depth in a minute with Doug. But basically, here's the story. In 2015, Revenue Quebec was doing an undercover investigation on Uber for suspected tax fraud. And in May of that year, they got a warrant to raid two of Uber's offices in Montreal.

And here's where it gets a little weird. They start searching there. But what's absolutely fascinating is that the two teams that were searching two different premises of Uber noticed the same thing happening. At 10.40 a.m., all the laptops, the smartphones, the tablets, suddenly they all stopped and restarted at exactly the same time. So, of course, they all noticed that, and the investigators decided to unplug the computers because they were afraid there would be some tampering happening remotely.

And while they were still conducting their searches, a couple of hours later, we could see from the court documents that the investigators are told by the Uber Quebec's general manager at the time, Jean-Nicolas Guillemette, that he had contacted engineers at the company's headquarters in San Francisco. And those engineers had encrypted all the data remotely. So yeah, this thing that allowed the company to immediately shut down its computers and smartphones when the raid happened, that's the kill switch. So for more on that, let's go back to Doug McMillan. Can you tell me a little bit more about the kill switch? What do we know about this tactic and how commonly it was used by Uber? This is a program that allows Uber's managers to hit a button and it will turn off access to all data on all the machines in a certain office. And in one case, for example, authorities, Dutch authorities were attempting to

raid Uber's European headquarters in Amsterdam. And Travis Kalanick, the former CEO, sent a message to managers there saying, please hit the kill switch ASAP. And, you know, according to the reporting, the documents that show that this was able to effectively prevent Dutch authorities from going into Uber's data and hurting their chances of properly investigating what was on their machines. software was used a dozen times in at least six countries over a two-year span, according to the documents and also previous reporting on the tool. And there's also some references to another software tool that Uber used called Grayball. And that's been previously reported, but we see a little bit more kind of evidence of how Uber executives talked about and how frequently they used it.

And what Grayball did was essentially create a geofence or create an area on a map where regulators who were trying to investigate Uber would pull up basically regulators who are trying to do a sting, like an undercover operation where they would get into Ubers. Uber would affect effectively put a fence around them. And when they opened the app, they would not see any Ubers on their app and they would not be able to

order an Uber. So I think, you know, one of the things that people will be looking at as a result of the Uber files will be, you know, whether Uber abided by those laws of allowing justice to occur and allowing police investigations to occur. I mean, the kill switch, gray ball, like this sounds like a 007 movie, like an all-century spy. How has Uber responded to the revelations in these leaks? that a lot of the things that happened, well, everything that happened in these documents happened in 2014, 2015, 2016, years ago,

during a time when Uber was led by its previous CEO, Travis Kalanick. Kalanick was ousted from being CEO in 2017. And the company has very carefully tried to, under a new CEO, Dara Khosrowshahi, has tried to clean up its image. And they've said that they've undergone a lot of internal processes to not fall into the same problems as Uber had before. They said that basically Travis Kalanick said and did a lot of things that Uber would not condone today.

So a lot of Uber's responses to the Uber file stories was distancing themselves from the previous management that led the company during this time. though. Uber, you know, my story in South Africa, Uber said that, you know, they said they defended their business and they said that drivers can find good economic opportunities driving for Uber. You know, but by and large, drivers that I talked to said that they're not doing enough and there continue to be protests all the time about, you know, Uber is not effectively helping drivers make enough money and some cases not protecting us from safety risks. Right. So, I mean, the company is saying Kalanick isn't there anymore. They wouldn't employ these tactics today. But Doug, I mean, as someone who's been covering this company for years, when you're looking at this, even if we're talking about what happened then in that period,

what kind of an impact have those practices from that period had on what we see today? Well, the most obvious thing is that Uber is here now. It's everywhere we are. Well, pretty much everywhere. It's some places like Russia and also in China, a few other markets, they did fail and retreat. But for the most part, the story about Uber's growing through hardball tactics is that it did succeed, that they did get their app in the hands of riders, and they did successfully recruit a lot of drivers to the platform. The problem is the company still is struggling to prove that it's a viable business model.

It does not turn a profit. They still lose millions and millions of dollars every year. I think they're tracking towards profitability. I think they're getting better slowly, but they still haven't proved that they can get you to the airport and make a profit on that ride. So what was the cost of that growth? I think, you know, you have to go back to the drivers and the people like the guy I talked to, Sean Coupadeau in South Africa, who, you know, were sold this vision of economic

empowerment and ended up worse off than they were before. And you have to look at, you know, the ways that Uber kind of flaunted laws and kind of broke with tradition in places like in France, where now Emmanuel Macron faces questions about what did he do to enable the rise of this company that's still very controversial. So I think, you know, I think there still are some kind of reckoning ahead for Uber. And, you know, potentially, you know, I think there are questions about what will Uber look like in two, three, four or five plus years, you know, in the future where it's not clear they're going to be able to continue to lose

money forever. Right. Well, and, you know, as you've noted, they've also contributed to kind of decimation of the taxi industry in a lot of cities, a lot of countries. Yeah. Doug, thank you so much. This is fascinating stuff. And I guess we'll have to wait and see what happens. Yeah, thanks very much for having me anytime. That's all for today. I'm Allie James, filling in for Jamie Poisson. Thanks for listening to FrontBurr, and we'll talk to you tomorrow.