Uber is hoping to keep the ship on course, under the watch of new CEO Dara Khosrowshahi, as it continues to develop the technology it hopes will replace its human drivers. Placing a 24,000-unit order for Volvo’s XC90 SUVs, Uber will be modifying the cars to integrate its self-driving tech. However, yet another Uber scandal has emerged this week, as the company fired its CSO for his involvement in suppressing a 57m-record data breach.
The Volvo deal is an evolution of a partnership that began back in 2016, with Uber’s Advanced Technologies Group. Scheduled for delivery in 2019, it would give Uber the biggest self-driving fleet on the road – although we expect other firms to significantly increase the size of their fleets through the period. This is a busy time in the market, where it seems that most vendors are busy ensuring that their technologies aren’t tied to the first self-driving death – and the ensuing tabloid furor.
However, the hardware and software that Uber plans to use to modify the SUVs is the subject of a lawsuit from Waymo, which contests that a former employee stole trade secrets from Alphabet (Waymo’s parent company) and gave them to Uber by way of the latter’s acquisition of Otto – a self-driving truck startup founded by the man at the center of the lawsuit, Anthony Levandowski.
The case has gone quiet in the past weeks, and the newly appointed Khosrowshahi will be hoping that Uber can make it out unscathed. Similarly, he will be hoping that the fallout from the latest scandal will be minimal, after it transpired that hackers managed to access 57m passenger account records in October 2016 – and that former Chief Security Officer Joe Sullivan paid them $100,000 to delete the data.
That move has now cost Sullivan and an associate their jobs, with Khosrowshahi confirming that they were no longer with the company. The compromised data included email addresses, names, and phone numbers, although some 600,000 Uber drivers also had their license plates exposed.
The attackers breached a private Uber GitHub repository, which then allowed them to access an AWS account that housed the data. They then downloaded this cache, and emailed with a blackmail threat. Bloomberg reports that Sullivan, a former federal prosecutor, former Facebook executive, and the deputy to former CEO Travis Kalanick, decided to pay up. Khosrowshahi learned about the incident “recently,” and forced Sullivan to resign.
The revelation will have irked SoftBank, which had just confirmed that it had invested $1bn into Uber, and stood to invest up to $9bn more – which could have given it a 15% stake, had it bought shares from other investors. However, the latest incident, much like the Verizon-Yahoo acquisition, might hinder Uber’s recovery – further damaging its valuation.
But at least the deal went through, after rumors last month indicated that SoftBank was close to pulling out entirely. The investment reports surfaced back in July, and SoftBank will likely push to use Uber to drive consolidation in the global ride-sharing market – which has a lot of players. SoftBank owns stakes in Didi Chuxing, the company that forced Uber out of China, as well as Grab, another Asian startup.
Bloomberg reported news of the success, but the Financial Times later said that SoftBank might abandon the $1bn investment if it can’t dislodge the other investors. That would be bad news for Kalanick, as his only reprieve from a fraud lawsuit brought by Uber investor Benchmark is the success of the SoftBank deal.
The lawsuit will be dropped if Kalanick’s board influence is weakened – but it’s a sign of how big a hole Uber has dug for itself that the new CEO can’t dislodge the man who presided over Uber’s fall from grace. Kalanick still has a very disruptive influence over the startup. Excising him would be good PR for Khosrowshahi though.
Returning to Volvo, it’s important to note that this isn’t an exclusive deal, meaning Uber can source cars from other automakers, and Volvo can pursue other ride-sharing platforms. Volvo itself has plans to build completely self-driving cars, and will be using that same version as the basis for its own R&D projects. Volvo plans to deliver its completely autonomous car in 2021, and will aim to retain its renowned reputation for vehicular safety.