What the Uber Leaks Really Reveal
It's not what you're being told
I have a confession to make. It’s embarrassing, and many of you will think less of me, but I have to come clean. I hated the movie No Country for Old Men. As I sit here, it has Rotten Tomato scores of 93% and 86% from critics and audiences, respectively, so you’ll have to count me in the minority 14% of losers who didn’t like it. I didn’t like the story and thought Javier Bardem was fine, but I couldn’t carry the movie. As Gertrude Stein once wrote, I think “there is no there there.” This leads me to the earth-shattering revelation du jour: the International Consortium of Investigative Journalists (ICIJ) announced The Guardian received a treasure trove of leaked communications between Uber and government officials worldwide. Based on this leak, they’ve published a series of articles addressing various topics in the documents. And I have to say, much like No Country for Old Men, I don’t think there is a there there.
Before we get too far into this, let me do the customary throat clearing and say in 2017, under the tech bro leadership of Travis Kalanick, Uber seemed to culturally suck…with many claims of various types of sexual harassment; and more recently, being used by over 500 women who claim drivers sexually assaulted them and that the company’s response “has been slow and inadequate, with horrific consequences.” If you sexually harass someone, you’re an asshole, and if you’re a CEO of a company where these practices are rampant, you deserve to get tossed. Period. With that out of the way, let’s analyze the leaked documents and subsequent reporting.
The source of the leak is Uber’s former European lobbyist chief, Mark MacGann. Having left the company over five years ago and having recently settled a lawsuit with his former employer to get paid a bonus he was owed, MacGann now claims: “there is no excuse for how the company played with people’s lives…I am disgusted and ashamed that I was a party to the trivialisation [sic] of such violence.” Holy shit! Uber played with people’s lives and committed violent acts…this should be juicy!
Here is how the ICIJ summarizes the leaked documents:
The documents show how company executives lobbied politicians around the world for favors; deployed a kill switch, far more extensively than previously reported, to prevent authorities from accessing documents; negotiated investment deals with now-sanctioned Russian oligarchs; and exploited violence against Uber drivers to push for favorable regulations.
So a company solicited politicians to gain access to their countries’ markets and tried to limit their tax liabilities. Gasp! Horror! Are you clutching your pearls? Well, you better clutch them harder, you capitalist, globalist, bigot!
Right off the bat, call me suspect.
On to MacGann himself. Laughably he claims “he never had time to question the overall effect of how the company was doing business until after he left and had time to reflect.” Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiight. We all know it takes half a decade to realize you committed horrific acts of evil…or something like that.
Further, he asserts that “he grew frustrated with what he called the company’s inadequate response as he faced increasing harassment from the taxi industry in various countries,” but the article also informs us that Uber assigned him a team of bodyguards! Does he deem the response inadequate because they didn’t hire John Rambo, Jason Bourne, and a Navy SEALs unit to provide him lifetime protection?
Is Uber a Tax Cheat?
Let’s agree that companies are not meant to be unbiased. As a matter of fact, it is their duty to their shareholders that they are extraordinarily biased to maximize returns on investment. You can like it, not like it, you can hate it..whatever, that is their fiduciary responsibility, so get over it.
So when one of the main pieces of the exposé revealed that Uber lobbied then French Economic Minister, now President Emmanual Macron, and former European Commissioner Neelie Kroes to get favorable access to French and, more broadly, European markets, my general thought was…so what? According to Statista, in the US in 2021 alone, companies spent $3.7B on lobbying efforts. Why do we think they do that? For many companies, lobbying governments to get favorable policies and standards in place to raise the bar for new entrants is the primary corporate strategy. Don’t hate the player, hate the game…and yes, indeed, we should hate the game, but Uber is a player, not the rule setter. That falls squarely on our governments. Governments and the politicians who run them are supposed to represent their constituents and make decisions based purely on what improves their lives while not violating other people’s liberty. If they are corrupt, I am all for blaming them. If Macron, Kroes, or anyone else in positions of government influence did something unethical, throw the book at them because that is where to place the blame, not with Uber.
Another horror revealed in the leaks is that Uber set up their European operations in The Netherlands. Why, you ask? Well, because the country is business-friendly. From the article:
The documents also indicate that Uber was accustomed to Dutch authorities’ shielding the company from regulatory scrutiny by other countries.
“This relationship is of great importance and value in light of our corporate structure and tax effectiveness,” van der Woude noted in a confidential message. “The Dutch tax authorities have been collaborative and defensive of us.”
Gee…well, maybe, if The Netherlands wants companies to continue setting up corporations in their country, they should be protective of them, no? If governments want Uber to set up a corporation in their country so that they pay taxes there..fine, make the law, or reduce the country’s taxes, so it is more attractive for companies like Uber to organize there. It is not a company’s obligation to pay the most taxes possible. Do any of you reading this try to maximize your tax burden when filing your income taxes? If not, why should a corporation be any different?
How about in India?
The leaked files, corporate records, and research by financial experts paint a different picture of Uber’s contribution to India’s economy. They show how the company devised ways to lower its tax bill, fought tax authorities in court, and used Dutch subsidiaries to conduct its main business activities in India.
Once again, did they do anything illegal? Or is it just that they tried to lower their tax bill? They fought tax authorities in court…ok, so what? This makes it seem like they sued the government, not the other way around…so could it be that Uber was getting screwed by the Indian government in these instances? I don’t know, but this strikes me as an ideological dislike of Uber rather than proving they did anything wrong.
Did Uber Screw Their Drivers?
In another article salaciously titled Uber shifted scrutiny to drivers as it dodged tens of millions in taxes, Scilla Alecci writes:
As scrutiny ramped up, the leaked documents show, Uber hit on a brazen strategy to steer attention away from its tax liabilities: help authorities collect taxes from its drivers instead.
To be generous, this is misleading; to be more precise, it’s utter bullshit. If this were all you read, you would believe that Uber leaders willingly threw their drivers under the bus to lessen their tax burden. The article explains that is not what happened.
Uber’s special connection with the Netherlands became evident in spring 2015 when tax authorities from France, Germany, Sweden, the United Kingdom and Belgium contacted their Dutch counterpart to request that Uber BV share driver information.
The authorities wanted to know the workers’ names and dates of birth, license plates, number of trips, bank accounts and other details to determine their tax liabilities, a leaked email says.
The request initially alarmed Uber managers, leaked records show. They feared that authorities would start targeting drivers ー the company’s “supply” ー demanding back taxes from them and sharing data with other agencies. They also worried that drivers would leave the company and work for Uber’s competitors.
So, in fact, Uber did not willingly throw their drivers under the bus. They were concerned that multiple European governments were requesting this information, that their drivers would get hit with retroactive taxes, and that they would lose them to competitors. This is like blaming the person whose house was robbed for not having a gun to shoot the intruder.
Another situation under scrutiny is their work in Nigeria. This one seems to be a bit more questionable when a “senior policy manager” writes:
We met with Tax Authorities in Lagos who lauded our efforts at ensuring [drivers’] tax compliance, and shifted their focus from Uber ‘evading tax’ to working together to ensure [drivers’] compliance,
Ok, fine, but ensuring tax compliance so that a contractor, which they are in the Uber business model (more on that next), meets a country’s tax standards is, well, what you need to do. And as nothing else describes this event, I won’t get my panties in a bunch over this one out-of-context quote.
What is Uber’s Business?
Ok, now I’m getting upset.
Uber argues that it’s not a transportation company but the operator of a digital platform that connects riders to drivers, who are independent contractors, not employees. The arrangement allows the company to avoid a host of costs and responsibilities, such as making social security contributions and collecting value-added taxes on rides.
Uber argues that? No, that is actually their business. This is like saying Delta Airlines argues they are an airline. Or Walmart argues they are a retailer. It is an indisputably valid claim, and a litany of companies operate under the same business model: eBay, Toptal, Fiverr, and Etsy, to name a few. All these companies provide technology that puts buyers and sellers of different goods together, whether those goods are software developers, crocheters, graphic designers, or people driving cars.
With the weasel word “argues,” the author tries to make it seem like Uber is trying to get by on some technicality. It is not…they are a technology platform…that is their business, full stop.
Russia, Russia, Russia
Because in today’s world, if a homeowner doesn’t like the color a neighbor painted their house, Russia must be to blame somehow. Hence, an entire article is dedicated to Uber’s dealings in Russia. The article breathlessly describes Uber leadership trying to win favor with the Oligarchs to set up shop. The leaker, MacGann himself, wrote, “God love the Russians, where business and politics are so….cosy.“ Ohhh. I get it; he’s talking about corruption…what a funny guy.
Later, there is a quote highlighted in the article which declares:
OMG…dangerous to citizens? Are Uber’s cars in Russia going to be nuclear-powered, engineered by the same folks operating Chornobyl? Will they start shooting out VX gas if a rider is rude to the driver? No, this objection was raised by non-other than the Russian taxi drivers union. Are they telling me that a taxi driver union doesn’t like Uber? Here is my shocked face.
The only potentially relevant claim against Uber is that they may have offered $50 million in stock warrants to LetterOne. This Russian-based investment firm also took out a $200 million stake in Uber. In return, it seems, LetterOne helped them connect with people like Vladimir Senin, who was the deputy chairman of Alfa Bank, and to who Uber paid $300,000 for “government relations work.” Of course, everyone on Uber’s side disputes the claim, so who knows, but we know they weren’t trying to keep the relationship a secret because they openly admit to LetterOne’s stake and the $300,000 payment.
All that being said, remember, these were not events that happened two weeks ago, but rather in 2016, before every company pulled out of Russia, because people saw it as one of the next four developing economies (along with the other BRIC countries - Brazil, India, and China). And yes, Russia has been a corrupt country for a long time. Several Russian-born friends have told me that you can’t get anything done in Russia without bribing someone, and usually several people. Is it right? I don’t know…but that’s how it is.
The Cherry on Top
I honestly wasn’t sure where to put this, but I felt it had to be mentioned. One of the most salacious points made about this leak is Uber’s use of a “Kill Switch” to prevent government agents from accessing sensitive data on their networks during raids.
The Uber Files also show that the company’s use of stealth technology to thwart government investigations was far more expansive than previously reported. Company executives activated a so-called kill switch to cut access to company servers and prevent authorities from seizing evidence during raids on Uber offices in at least six countries, according to the leaked documents.
Was this ethical? Probably not…but then again, I am a Libertarian, so screw the Feds. That said, there is something deeply ironic about an organization like The ICIJ being upset that a private company is using technology to thwart government heavy-handedness. Maybe it’s just me, but I have to admit I laughed a bit at this.
At any rate, I think I’ve made my point. It is undoubtedly in the zeitgeist to attack the big tech companies, and frequently, they richly deserve it. Still, these leaks paint a portrait of a scrappy company, with a technology no one had seen before, that was doing everything they could to unseat entrenched powers by utilizing tactics that many companies around the world deploy every day.
But then again, maybe I’ll re-read these articles while I re-watch No Country for Old Men because I don’t get the big deal about either one.