Photographer: Eric Risberg/AP Photo

Uber Criminal Probe Shines Light on Vanishing Message System

Updated on
  • Ex-Uber employee tells of tactics used against overseas rivals
  • Judge delays Waymo trial amid fresh concern over Uber conduct

A criminal probe of Uber Technologies Inc. has turned up revelations that the ride-hailing company used encrypted messaging to hide its tracks while spying on rivals, evading authorities and fighting off lawsuits.

Richard Jacobs, who was a manager on a corporate surveillance team at Uber, privately told federal prosecutors about the secret messaging system and publicly testified about it on Tuesday. He provided details on how Uber employees were trained to “destroy communications that might be considered sensitive.”

His allegations reveal yet another dimension of Uber’s renegade corporate ethos, which has landed the San Francisco-based company in multiple scandals. As of October, Uber was facing at least five criminal probes by the U.S. Justice Department, Bloomberg News reported.

The revelations stem from and further complicate an already labyrinthine plot in Waymo’s lawsuit accusing Uber of trade-secret theft. Jacobs was put on the witness stand Tuesday after U.S. District Judge William Alsup learned from prosecutors last week that Jacobs had communicated with them.

Jacobs became the star attraction at a hearing that was meant to cover final preparations for a much-anticipated trial over allegations that Uber stole self-driving technology from Waymo. The trial, which was set to begin Wednesday with jury selection, was indefinitely postponed over the judge’s concern that relevant information that Jacobs shared with prosecutors may have been withheld from Waymo.

“I would look like a fool if Uber were to fool me,” Alsup said, rejecting an Uber lawyer’s attempt to push forward with trial. The judge said he’d been burned enough times by Uber’s promises that it had scoured its servers for key evidence it was required to turn over.

Uber Pushed the Limits of the Law. Now Comes the Reckoning

Alsup said that he takes Jacobs’s allegations seriously because prosecutors found the ex-employee to be credible in his account of Uber relying on non-traceable devices and automatically-deleting messaging systems.

“It turns out the server is only for the dummies. The stuff that does matter goes on this shadow system," Alsup said. "You should’ve come clean on this a long time ago.”

On the other hand, the judge forced Jacobs to reveal that he reached a $4.5 million settlement with Uber that Alsup said could mean he’s been "bought off."

Jacobs said he’d raised his concerns with executives at Uber before working out an agreement over his departure. He testified that he’s still earning much of the settlement money as a paid consultant to Uber, and is required as part of the agreement to not publicly disparage the company.

Under intense questioning from both Waymo and the judge, Jacobs softened and recanted some of the most sensational criticism of Uber contained in a 37-page letter his lawyer wrote to prosecutors. The letter is sealed but the judge said he intends to make it public after hearing any objections.

Over the course of the hearing it became unclear whether the seemingly bombshell revelations about Uber’s corporate surveillance tactics will be of much help to Waymo’s case.

Overseas Rivals

Jacobs testified that Uber’s Strategic Services Group, which since has been renamed, was focused mostly on gaining an edge on overseas rivals. While he said stealing trade secrets was part of that mission, he told the judge he wasn’t aware of efforts to extract proprietary information from U.S. firms -- including Waymo. He said the team sought to gather information on drivers, metrics and incentives at competing foreign platforms.

“I did not believe it was patently illegal,” Jacobs said. “I had questions about the ethics of it. I suppose because of my personal ethics it felt overly aggressive and invasive.”

Jacobs testified that some Uber employees, including those working in its autonomous driving project, were instructed to use ephemeral self-deleting messaging on Wickr networks. The surveillance team used “anonymous servers” separate from the “main part of Uber” and "non-attributable devices" purchased for the company by outside vendors, he said.

A lawyer for Waymo asked Jacobs about an Uber staff attorney who allegedly guided efforts to “impede, obstruct, or influence” lawsuits against the company.

“There was legal training around the use of attorney-client privilege markings on written materials and the implementation of encrypted and ephemeral communications intended to destroy communications that might be considered sensitive,” Jacobs said.

Uber said none of Tuesday’s testimony “changes the merits” of Waymo’s lawsuit. The ride-hailing company has denied wrongdoing.

"Jacobs himself said on the stand today that he was not aware of any Waymo trade secrets being stolen,” Uber said in an emailed statement.

‘Seeking Money’

Arturo Gonzalez, a lawyer for Uber, sought to put Jacobs’s assertions about the company’s practices in context, saying his attorney conveyed them while “seeking money” from Uber.

“There’s no there there,” Gonzalez said. He convinced Alsup that Waymo needs to reveal whether it, too, relies on self-deleting technology.

Waymo said the postponement of the trial will give it a chance to investigate the issues raised by Jacobs.

"The evidence brought to light over the weekend by the U.S. Attorney’s office and revealed, in part, today in court is significant and troubling," the company said in an emailed statement.

The Waymo trial already has been delayed once, from Oct. 10, when the judge agreed to give Waymo more time to evaluate a 2016 report commissioned by Uber to vet its hire of the engineer at the center of the dispute, Anthony Levandowski.

Alsup referred the lawsuit to the U.S. Attorney’s office in May. Prosecutors opened an investigation of Uber for trade-secret theft, according to people familiar with the matter.

The Strategic Services Group was led by Joe Sullivan, who had been Uber’s chief security officer. He was ousted as the company announced last week that it had concealed a data breach that compromised information on 57 million riders and drivers. Sullivan and his team had been at the center of an internal inquiry led by the company’s board of directors.

The team acted as a corporate intelligence agency, conducting its own background checks and monitoring employees and competitors. Much of its work has been cloaked in secrecy even within the company.

Alsup said there’s a 50-50 chance the information revealed by Jacobs will prove damaging to Uber or a “dry hole.”

“We need to get to the bottom of this.”

The case is Waymo LLC v. Uber Technologies Inc., 17-cv-00939, U.S. District Court, Northern District of California (San Francisco).

— With assistance by Eric Newcomer

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE