Uber’s messy data breach collides with launch of SoftBank deal

Above, a traveler tries to book a ride with Uber at LaGuardia Airport in New York. Uber was first hacked in October 2016 and discovered the data breach the following month. (AP)

TORONTO/SAN FRANCISCO: A newspaper advertisement for an Uber Technologies stock sale was juxtaposed on Wednesday with a report that the ride-service provider had covered up a data hack — something of a metaphor for Uber, a company with boundless investor interest, but whose penchant for rule-breaking has led to a series of scandals.
The stock sale advertised in the New York Times will enable Uber investors to sell their shares to Japanese investor SoftBank, a critical deal for the company whose problems included building software to spy on competitors and to evade regulators and being investigated in Asia for paying bribes.
Uber on Tuesday said that it had paid hackers $100,000 (SR375,000) to destroy data on more than 57 million customers and drivers that was stolen from the company — and decided under the previous CEO Travis Kalanick not to report the matter to victims or authorities. Uber was first hacked in October 2016 and discovered the data breach the following month.
Chief Executive Dara Khosrowshahi, who took the helm in August with the mission of turning around the company and overhauling its culture, acknowledged in a blog that Uber had erred in its handling of the breach.
The timing of the disclosure could hardly have been worse.
The company is trying to complete a deal with SoftBank Group Corp. in which the Japanese firm would invest as much as $10 billion for at least 14 percent of the company, mostly by buying out existing shareholders. SoftBank is advertising to find shareholders who want to sell.
Uber last month announced a preliminary deal for the SoftBank investment.
One question is whether SoftBank will now try to alter the price of the deal. One source familiar with the matter said SoftBank is planning to stick to its agreement to invest in Uber but may seek better terms. SoftBank has not yet made a final decision on whether to renegotiate, the source said.
Another question is the future of Kalanick, the co-founder who led Uber to becoming a global powerhouse but did so with aggressive and controversial tactics. He was forced out by investors in June who feared his leadership style would damage the company, although he stayed on the board and remains a significant shareholder.
A bitter battle among investors over how to resolve Uber’s problems led to a lawsuit by early investor Benchmark, which sought to oust Kalanick from any role. But a settlement was reached earlier this month to pave the way for the SoftBank deal, with Kalanick retaining his board seat and other rights.
Kalanick was made aware of the hack last November and was aware of the $100,000 payment, according to a person close to the matter. Kalanick has declined to comment. Uber did not respond to questions from Reuters on Wednesday.
The scope of the repercussions Uber will face for the October 2016 data breach began to take shape Wednesday with governments around the world opening investigations.
Authorities in Britain, Australia and the Philippines said they would investigate Uber’s response to the data breach. London’s transport regulator, which has been in discussions with Uber after stripping it of its license to operate, said it was pressing Uber for details.