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Uber Faces FBI Probe Over Program Targeting Rival Lyft (wsj.com)

Posted by BeauHD on from the dig-a-hole-for-yourself dept.

cdreimer writes: According to a report in The Wall Street Journal (Warning: source may be paywalled, alternative source), Uber is under investigation by federal law-enforcement authorities for using a program called "Hell" to illegally interfere with the competition by creating fake Lyft accounts, initiating phony ride requests for Lyft drivers, and offering cash bonuses for drivers who drive for both services to leave Lyft. This is creating a new headache for incoming CEO Dara Khosrowshahi to deal with. From the report: "Federal law-enforcement authorities in New York are investigating whether Uber Technologies Inc. used software to interfere illegally with its competitors, according to people familiar with the investigation, adding to legal pressures facing the embattled ride-hailing company and its new chief executive. The investigation, led by the Federal Bureau of Investigation's New York office and the Manhattan U.S. attorney's office, is focused on a defunct Uber program, known internally as 'Hell,' that could track drivers working for rival service Lyft Inc., the people said. 'We are cooperating with the SDNY investigation,' said an Uber spokesman, referring to New York's Southern District. He declined to offer additional details. Uber has never publicly discussed the details of the program. But people familiar with the matter said 'Hell' worked like this: Uber created fake Lyft customer accounts, tricking Lyft's system into believing prospective customers were seeking rides in various locations around a city. That allowed Uber to see which Lyft drivers were nearby and what prices they were offering for various routes, similar to how such information appears when an authentic Lyft app is opened on a user's smartphone, these people said. The program was also used to glean data on drivers who worked for both companies, and whom Uber could target with cash incentives to get them to leave Lyft, said these people, who added that the program was discontinued last year."

13 comments

  1. Nothing will happen by Anonymous Coward · · Score: 0

    Uber gets investigated alll the time...nothing happens. Some backdoor deals, a few mid level managers/engineers throw under the boss, and the CEO takes a long vacation and claims he'll be back.

    1. Re:Nothing will happen by ShanghaiBill · · Score: 4, Interesting

      All the ethical scandals are having an effect. Uber's market share is slipping. I switched to Lyft more than a year ago. Same service, better app, nicer people.

    2. Re:Nothing will happen by rogoshen1 · · Score: 3

      companies with fundamentals as shitty as Uber's will never live up to the hype. At some point the VC money dump will dry up, and Uber will be gone.

      (Or alternatively, the valuation is not as pants on head retarded as it seems, and they're doing fine.. Totally plausible.)

    3. Re:Nothing will happen by Kjella · · Score: 2

      Or they pull off the Amazon gig, despite having an absurd P/E ratio in the dotcom boom and causing massive losses in the dotcom bust they were the biggest of the failures and rebounded better than the competitors. Sometimes if everybody believes in you will succeed that's what happens even though reason has nothing to do with it. See also crypto-currencies.

      --
      Live today, because you never know what tomorrow brings
    4. Re:Nothing will happen by ShanghaiBill · · Score: 2

      Or alternatively, the valuation is not as pants on head retarded as it seems

      They are a private company, so we don't actually know their valuation. My guess is that when their next funding traunch is due, their valuation will be way down.

      There is an "early mover" advantage to auction sites, search engines, etc. that are in "winner take all" markets. But that doesn't apply to ride sharing. Most Lyft drivers also drive for Uber, and many customers also have both apps their phones. They will switch in a heartbeat to save $5.

      The only way Uber can get a "lock in" is if they roll out their own SDC service, and are the first to build up a fleet of their own cars. I just don't see them doing that quickly and competently enough to dominate.

    5. Re:Nothing will happen by Anonymous Coward · · Score: 0

      Amazon was loosing massive amounts of money to gain market share, under cut competition, grow infrastructure, and broaden its market offering. Correct me if I'm wrong but I don't think Uber is really doing the same. Uber is at the market share point where they need to cut the shenanigans and start becoming extremely profitable.

    6. Re:Nothing will happen by Anonymous Coward · · Score: 0

      The only way Uber can insure lock-in is to build a fleet of autonomous cars. That's where they're going. They need to hold it together until the technology and regulation catches up. Then all of the part timers that Uber has used to build their company will be out in the cold and they'll hit profitability.

  2. Hertz/Avis used rivalry to boost both by turkeydance · · Score: 1

    back in the day. but Uber won't work with anyone or anything. http://www.slate.com/articles/...

  3. New CEO by Anonymous Coward · · Score: 0

    These episodes should be easier to diffuse with a new CEO not associated with the incidents. While will be bumpy cleaning up , new Management can regain confidence by correcting. Uber has learned some hard lessons but also has valuable experience on how ride hailing market developing.

    Think the Board will save on legal damage by showing reasonable attempt to detect and deter bad behavior vs condoning.

  4. Xfiles should deal with a self driving car coverup by Joe_Dragon · · Score: 1

    Xfiles should deal with a self driving car coverup.