Just when it looked like the Waymo-Uber lawsuit was finally going to court, judge William Alsup pulled the brakes after the US Attorney for Northern California presented a truly staggering allegation – that Uber had been running a secret division tasked with stealing trade-secrets and IP from the tech industry. CEO Khosrowshahi thought the data leak last week was bad, but this is a whole new migraine for him to deal with.
There is a very real danger that the fallout from this civil suit will turn into a number of criminal charges, with Uber’s board potentially at risk of being ousted by furious shareholders. SoftBank’s recent investment plans looked like the beginning of a recovery, where Khosrowshahi could clean house and set things straight. It appears that the rabbit hole goes a lot deeper than he knew on his arrival – and if rumors of SoftBank’s offer valuing Uber at $48bn are correct, the spate of scandals will have cost Uber 30% of its peak valuation.
The first revelation came from the Northern California attorney, which wrote to the district court after coming into possession of a letter from Uber’s lawyers – filed separately from the Waymo case. Crucially, this letter (an email sent to board members by a former employee), mentions Waymo but was not turned over in the Waymo case due to a technicality. The NorCal attorney then reached out to judge Alsup. This does not look good, and Alsup seems pretty riled up about it.
According to former Uber employee, security analyst Richard Jacobs, Uber’s Strategic Services Group (SSG) was tasked with stealing trade secrets from rivals, and set up solely to do so. Using anonymous servers, separate from Uber, and using a private Wickr messaging system to keep communications off of official channels, Jacobs says there were strict instructions not to leave a paper trail, and Forbes says that it was Uber’s lawyers that encouraged their use.
Notably, new CEO Khosrowshahi ordered the Wickr installation to be killed, banning Uber staff from using such apps as Wickr and Telegram for company business – a practice allowed under deposed CEO Kalanick. Khosrowshahi seems to want a paper trail, perhaps as a means of ensuring he can’t be snared by a snake hiding in the grass.
“If even half of what’s in that letter is true, it would be a huge injustice to force Waymo to go to trial and not be able to prove the things that are said in that letter,” said judge Alsup. Commencing the court proceedings would have prevented Waymo from using the new allegations, and so he has called a halt to examine the new material.
In the San Francisco district court, Alsup questioned Jacobs, who said that he did not feel that the work he carried out was illegal, but did worry about whether it was ethical because it “felt overly aggressive and invasive,” – according to The Register, which adds that Jacobs was notably anxious and evasive, under questioning. Jacobs was very slow to answer the most critical question of whether the SSG had seen the documents at the heart of the lawsuit – the ones that Lewandowski stole from Waymo on his way out the door to found Otto, which Uber then acquired.
This is where the conspiracy allegations gain a lot more credence, as Uber’s defense has always been that it never took possession of those documents. Due to Uber’s lack of disclosure and general reluctance to share information, this new set of evidence might be enough to see Uber charged with being in contempt of court. This is because Jacob’s lawyers sent the letter containing the SSG allegations to Uber – and Uber should have disclosed this letter to the court and Waymo as part of the process.
Compounding this seedy looking behavior is the fact that it has now transpired that Jacobs resigned after Uber caught him trying to download corporate documents to his personal computer, after which he was paid $2m by Uber – which then hired as a consultant for $1m, with a $1.5m payment due at the end of the contract. Jacob’s lawyer was also paid $3m.
The contents of Jacob’s resignation email were later unveiled, which just adds fuel to this apparent dumpster fire. Titled ‘Criminal and unethical activities in security,’ and sent to members of the board and former CEO Kalanick, the email alleged the existence and activities of the SSG. Waymo was mentioned. None of this information was initially disclosed to Waymo or the court. This has only come to light after the Northern Californian attorney’s separate investigation intervened in Alsup’s district court.
Uber is now trying to wriggle its way out, and judge Alsup is not impressed. As per The Register, “he was stealing those documents in order to be a whistleblower,” said Uber’s deputy general counsel, Angela Padilla, who stressed that the claims in the resignation email were invented.
Alsup then asked “so he’s an extortionist, and his claims were meritless, but you hired him again for a year, to help investigate his own allegations? How many extortionate ex-employees has Uber then rehired as consultants?”
After Padilla tried to explain that it hadn’t turned over the email to Waymo’s lawyers because they had not included “Waymo” in their terms of discovery, Alsup’s patience appears to have worn rather thin. “It sure looks like you covered this up, refused to turn the Jacobs letter over to your in-house counsel handling the Waymo case, dismissed the letter here as a bunch of BS, and then hired Mr Jacobs and paid him $4.5m.”
He added that paying Jacob’s lawyers $3m for a single letter appeared “unconscionable,” before ordering the new round of discovery and a halt in the trial – which will now allow Waymo’s lawyers to dig even deeper. Alsup said “I am going to wreck the holiday of all you lawyers, but you get paid too much money, I don’t feel bad.” The new trial date is the February 5th.
So to recap, Uber looks very shady, its logic on providing the apparently baseless email to the NorCal attorney doesn’t make sense, it re-hired an employee that apparently tried to extort the board (meaning the board should have known about the SSG), paid a huge amount to that employee’s lawyers, and then decided not to share any of this information with Waymo due to a technicality on evidence discovery.
“You’re just making the impression that this is a total cover-up. Your client is in a bad way now,” said Alsup, to Uber’s legal team.