Investigation details Uber's coordinated plan for undermining the competition(Read article summary)
A lengthy investigation undertaken by The Verge details the heavy-handed tactics used by Uber to go after the competition, including a team of contractors complete with burner phones and credit cards to sign up competing drivers.
Granting credence to accusations that have surfaced in recent weeks, documents obtained by The Verge reveal a detailed, coordinated program on Uber's part that includes Uber employees deliberately ordering and then canceling rides from Lyft drivers and other competitors as well as plans in place to recruit other companies' drivers.
The documents cite an Uber program called SLOG, which reportedly stands for Supplying Longterm Operations Growth, that outfits drivers known as "brand ambassadors" with burner iPhones and credit cards meant specifically to be used in the recruitment of competing drivers.
For example, The Verge article says that Uber drivers will hail a Lyft ride and then, over the course of the ride, attempt to woo the driver to jump ship and work for Uber. And in some cases Uber drivers have "driver kits" that let them sign up new drivers on the spot. Uber compensates drivers with generous commissions, which can reach as high as $750, for every new driver signed up, according to The Verge.
Further, Uber has apparently been carrying out this program across the country, in cities that include Los Angeles, Seattle, Boston, Miami, and Washington, The Verge notes.
On Tuesday, Uber issued a statement explaining the SLOG program. It says that its brand ambassadors "help recruit new riders and drivers through events and partnerships" and adds that "we never use marketing tactics that prevent a driver from making their living – and that includes never intentionally canceling rides."
Uber's tactics reported in The Verge fit with data recently compiled by Lyft and shared with CNN that alleges that Uber employees have cancelled more than 5,000 rides on Lyft drivers since last October. To arrive at this conclusion, Lyft said it cross-referenced the phone numbers of riders who had tried to woo them to Uber with the numbers of those who deliberately canceled Lyft rides, arriving at 5,560 canceled rides in total. In response, Uber categorically denied these claims, calling them "baseless and untrue." Moreover, Uber has claimed – though with less supporting evidence – that Lyft drivers have also taken part in these car-canceling tactics, canceling as many as 12,900 Uber trips.
Of course, the two companies cannot be knocked simply for recruiting the others' drivers. That kind of competition happens across industries. While drivers are allowed to work for both companies simultaneously, they are discouraged from doing so.
But when a driver from one company determines that a competing driver will not switch companies and then proceeds to hamper that driver's business, it could become problematic, as Neil Irwin notes in The New York Times:
Lyft has a better case for claiming malfeasance when Uber recruiters cancel rides because they see that the driver they have been assigned is someone they have already attempted to recruit. If that is as widespread as Lyft argues that it is, then things get into a much murkier area in which Uber’s recruitment efforts are actually undermining their competitor’s ability to do business.
Founded in 2009, Uber has expanded rapidly around the world and now operates in more than 100 cities in 43 different countries. A recent round of financing valued the company at $17 billion. Lyft, founded in 2012, is a significantly smaller operation; it was valued at around $700 million in a recent financing round.
But as Lyft has begun expanding its reach – notably in the roll out of its services in New York – tensions have heated in the competition between the two disruptive apps. Prior to The Verge's investigation, it was reported in May that both companies were offering significant bonuses to drivers who agreed to drive for the competing company.
For Uber, those disruptive techniques have also sparked ire from players outside of its direct competition, including massive protests from the traditional taxi industry and, in some cases, facing outright bans.
In recent weeks, Uber hired former Obama adviser David Plouffe as as senior vice president of policy and strategy. And last week it announced a new API that will let developers tie their companies' apps to Uber's services.