Investigation Reportedly Launched by Department of Justice into Uber’s Use of “Greyball” Software

The Department of Justice has launched an investigation into Uber’s use of the “Greyball” software program, following recent reports about the company’s use of this software to evade local law enforcement officials and regulators in new markets where the service was not yet permitted, according to Reuters.  Reuters reports that Uber has received a subpoena from a grand jury in Northern California  “seeking documents concerning how the software tool functioned and where it was deployed.”

According to Reuters, the investigation is still in its “early stages” and the nature of any potential federal criminal violation is “unclear.”

Reuters is also reporting that the city of Portland, Oregon is also planning on issuing a subpeona to Uber to force it to disclose the Greyball software.   According to Reuters, if Uber does not comply with the subpoena, the city of Portland will “review” Uber’s ability to operate in the city.

Uber’s use of the “Greyball” software program first came under scrutiny as a result of a story by the The New York Timeswhich was published in early March 2017 and reported on how Uber had used this software program as part of a larger program at Uber known as “VTOS”–an abbreviation for “Violation of Terms of Service.”     Following the publication of the report, Uber announced that it had ended the program, as reported by  The New York Times.

The Mercury News described Greyball as a tool that “allowed Uber to display a fake version of the app to certain customers” and to “block law enforcement” from requesting rides where Uber was “operating in violation of local rules.

It has been reported that the law firm of Sherman & Sterling has been retained by Uber’s board to conduct an internal investigation into how the software was used.  See The Mercury News.

The Department of Justice investigation is the latest in a string of legal problems for Uber this year, which have included legal issues over Uber’s classification of drivers, sexual harassment claims, and a trade secret lawsuit.  One cannot help but wonder what the long-term business impact will be of all of these legal problems on the ultimate success or failure of the company.

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