BE2C2 Report — The U.S. Department of Justice has begun a criminal investigation into Uber Technologies Inc’s use of a software tool that helped its drivers evade local transportation regulators.
Uber has acknowledged the software, known as “Greyball,” helped it identify and circumvent government officials who were trying to clamp down on Uber in areas where its service had not yet been approved, such as Portland, Oregon.
The company prohibited the use of Greyball for this purpose shortly after the New York Times revealed its existence in March, saying the program was created to check ride requests to prevent fraud and safeguard drivers. The Times report triggered a barrage of negative publicity for the company.
The criminal probe could become a significant problem facing the company that is already struggling with an array of recent business and legal issues.
Uber lawyers said in letters to Portland authorities, which Portland made public in a report last week, that the Greyball technology was used ”exceedingly sparingly” in that city, before the service was approved there in 2015.
The nature of any potential federal criminal violation, and the likelihood of anyone being charged, is unclear. The investigation is still in its early stages, the sources said.
Bloomberg news service reported the existence of a federal probe last week, but did not identify it as criminal.
The ride services company’s board has retained an outside law firm, Shearman & Sterling LLP, reported Newsweek.
Uber, a venture capital-backed firm most recently valued at $68 billion, has long had a reputation as an aggressive startup.
It has been battered with multiple controversies over the last few months that have raised questions about Chief Executive Travis Kalanick and led him to say he needed “leadership help,” reported Bloomberg.
In a related note, the ride-hailing service company has expanded its operations in Pakistan. It will now be offering its service in Hyderabad city of Sindh. The move would make it the second city in the province of Sindh to get Uber, and the fifth city in Pakistan.
Uber, which started its service in 2009, is now available in over 450+ cities in over 75 countries spanning six continents. The service made inroads in the Pakistani market back in 2015 and was an instant success.