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Uber reveals the secrets of success, and Germany learns to live without Russian gas

11-7-2022 |

Fresh - freshly squeezed news from the international press. We prepare it 3 times a week.

The Guardian: Uber's data leak - what's behind the company's success

A leaked trove of confidential files has revealed the inside story of how the tech giant Uber flouted laws, duped police, exploited violence against drivers and secretly lobbied governments during its aggressive global expansion.

The unprecedented leak to the Guardian of more than 124,000 documents – known as the Uber files – lays bare the ethically questionable practices that fuelled the company’s transformation into one of Silicon Valley’s most famous exports.

The leak spans a five-year period when Uber was run by its co-founder Travis Kalanick, who tried to force the cab-hailing service into cities around the world, even if that meant breaching laws and taxi regulations.

During the fierce global backlash, the data shows how Uber tried to shore up support by discreetly courting prime ministers, presidents, billionaires, oligarchs and media barons.

Leaked messages suggest Uber executives were at the same time under no illusions about the company’s law-breaking, with one executive joking they had become “pirates” and another conceding: “We’re just fucking illegal.”

The cache of files, which span 2013 to 2017, includes more than 83,000 emails, iMessages and WhatsApp messages, including often frank and unvarnished communications between Kalanick and his top team of executives.

In one exchange, Kalanick dismissed concerns from other executives that sending Uber drivers to a protest in France put them at risk of violence from angry opponents in the taxi industry.

“I think it’s worth it,” he shot back. “Violence guarantee[s] success.”

Travis Kalanick, 2016
Photo: Danish Siddiqui/Reuters

The leak also contains texts between Kalanick and Emmanuel Macron, who secretly helped the company in France when he was economy minister, allowing Uber frequent and direct access to him and his staff.

Macron, the French president, appears to have gone to extraordinary lengths to help Uber, even telling the company he had brokered a secret “deal” with its opponents in the French cabinet.

Privately, Uber executives expressed barely disguised disdain for other elected officials who were who were less receptive to the company’s business model.

After the German chancellor, Olaf Scholz, who was mayor of Hamburg at the time, pushed back against Uber lobbyists and insisted on paying drivers a minimum wage, an executive told colleagues he was “a real comedian”.

The Guardian led a global investigation into the leaked Uber files, sharing the data with media organisations around the world via the International Consortium of Investigative Journalists (ICIJ). More than 180 journalists at 40 media outlets including Le Monde, Washington Post and the BBC will in the coming days publish a series of investigative reports about the tech giant.

In a statement responding to the leak, Uber admitted to “mistakes and missteps”, but said it had been transformed since 2017 under the leadership of its current chief executive, Dara Khosrowshahi.

“We have not and will not make excuses for past behaviour that is clearly not in line with our present values,” it said. “Instead, we ask the public to judge us by what we’ve done over the last five years and what we will do in the years to come.”

Kalanick’s spokesperson said Uber’s expansion initiatives were “led by over a hundred leaders in dozens of countries around the world and at all times under the direct oversight and with the full approval of Uber’s robust legal, policy and compliance groups”.

Deals behind the scenes

The leaked documents pull back the curtains on the methods Uber used to lay the foundations for its empire. One of the world’s largest work platforms, Uber is now a $43bn (£36bn) company, making approximately 19m journeys a day.

The files cover Uber’s operations across 40 countries during a period in which the company became a global behemoth, bulldozing its cab-hailing service into many of the cities in which it still operates today.

From Moscow to Johannesburg, bankrolled with unprecedented venture capital funding, Uber heavily subsidised journeys, seducing drivers and passengers on to the app with incentives and pricing models that would not be sustainable.

Uber undercut established taxi and cab markets and put pressure on governments to rewrite laws to help pave the way for an app-based, gig-economy model of work that has since proliferated across the world.

Its strategy often involved going over the heads of city mayors and transport authorities and straight to the seat of power.

In addition to meeting Biden at Davos, Uber executives met face-to-face with Macron, the Irish prime minister, Enda Kenny, the Israeli prime minister, Benjamin Netanyahu, and George Osborne, the UK’s chancellor at the time. A note from the meeting portrayed Osborne as a “strong advocate”.

The documents indicate Uber was adept at finding unofficial routes to power, applying influence through friends or intermediaries, or seeking out encounters with politicians at which aides and officials were not present.

It enlisted the backing of powerful figures in places such as Russia, Italy and Germany by offering them prized financial stakes in the startup and turning them into “strategic investors”.

And in a bid to shape policy debates, it paid prominent academics hundreds of thousands of dollars to produce research that supported the company’s claims about the benefits of its economic model.

Violence as a business model

Despite a well-financed and dogged lobbying operation, Uber’s efforts had mixed results. In some places Uber succeeded in persuading governments to rewrite laws, with lasting effects. But elsewhere, the company found itself blocked by entrenched taxi industries, outgunned by local cab-hailing rivals or opposed by leftwing politicians who simply refused to budge.

When faced with opposition, Uber sought to turn it to its advantage, seizing upon it to fuel the narrative its technology was disrupting antiquated transport systems, and urging governments to reform their laws.

As Uber launched across India, Kalanick’s top executive in Asia urged managers to focus on driving growth, even when “fires start to burn”. “Know this is a normal part of Uber’s business,” he said. “Embrace the chaos. It means you’re doing something meaningful.”

Kalanick appeared to put that ethos into practice in January 2016, when Uber’s attempts to upend markets in Europe led to angry protests in Belgium, Spain, Italy and France from taxi drivers who feared for their livelihoods.

Amid taxi strikes and riots in Paris, Kalanick ordered French executives to retaliate by encouraging Uber drivers to stage a counter-protest with mass civil disobedience.

Warned that doing so risked putting Uber drivers at risk of attacks from “extreme right thugs” who had infiltrated the taxi protests and were “spoiling for a fight”, Kalanick appeared to urge his team to press ahead regardless.

The decision to send Uber drivers into potentially volatile protests, despite the risks, was consistent with what one senior former executive told the Guardian was a strategy of “weaponising” drivers, and exploiting violence against them to “keep the controversy burning”.

It was a playbook that, leaked emails suggest, was repeated in Italy, Belgium, Spain, Switzerland and the Netherlands.

When masked men, reported to be angry taxi drivers, turned on Uber drivers with knuckle-dusters and a hammer in Amsterdam in March 2015, Uber staffers sought to turn it to their advantage to win concessions from the Dutch government.

Kalanick’s spokesperson questioned the authenticity of some documents. She said Kalanick “never suggested that Uber should take advantage of violence at the expense of driver safety” and any suggestion that he was involved in such activity would be “completely false”.

The law is only letters

Uber drivers were undoubtedly the target of vicious assaults and sometimes murders by furious taxi drivers. And the cab-hailing app, in some countries, found itself battling entrenched and monopolised taxi fleets with cosy relationships with city authorities. Uber often characterised its opponents in the regulated taxi markets as operating a “cartel”.

However, privately, Uber executives and staffers appear to have been in little doubt about the often rogue nature of their own operation.

In internal emails, staff referred to Uber’s “other than legal status”, or other forms of active non-compliance with regulations, in countries including Turkey, South Africa, Spain, the Czech Republic, Sweden, France, Germany, and Russia.

Across the world, police, transport officials and regulatory agencies sought to clamp down on Uber. In some cities, officials downloaded the app and hailed rides so they could crack down on unlicensed taxi journeys, fining Uber drivers and impounding their cars. Uber offices in dozens of countries were repeatedly raided by authorities.

Against this backdrop, Uber developed sophisticated methods to thwart law enforcement. One was known internally at Uber as a “kill switch”.

When an Uber office was raided, executives at the company frantically sent out instructions to IT staff to cut off access to the company’s main data systems, preventing authorities from gathering evidence.

The leaked files suggest the technique, signed off by Uber’s lawyers, was deployed at least 12 times during raids in France, the Netherlands, Belgium, India, Hungary and Romania.

AP: The island of bad luck - chaos in Sri Lanka

Sri Lanka is in a political vacuum for a second day Monday with opposition leaders yet to agree on who should replace its roundly rejected leaders, whose residences are occupied by protesters, angry over the country’s economic woes.

Protesters remained in President Gotabaya Rajapaksa’s residence, his seaside office and the prime minister’s official home, which they took possession of on Saturday demanding the two leaders to step down.

It was the biggest and most eventful day of protests over the past three months surrounding the administrative district in capital, Colombo.

They remained there Monday saying they would stay until the resignations are official.

Protests in Sri Lanka
Photo: Reuters

Prime Minister Ranil Wickremesinghe said Saturday he would leave office once a new government is in place, and hours later the speaker of Parliament said Rajapaksa would step down Wednesday.

Wickremesinghe’s office said Monday that President Rajapaksa has confirmed his earlier decision to resign on Wednesday.

The president hasn’t been seen or heard publicly since Saturday and his location is unknown, but his office said Sunday that he ordered the immediate distribution of a cooking gas consignment to the public, suggesting that he was still at work. Pressure on both men had grown as the economic meltdown set off acute shortages of essential items, leaving people struggling to obtain food, fuel and other necessities.

Opposition party leaders have been in discussion to form an alternative all-party government, an urgent requirement of bankrupt nation to continue discussions with the International Monetary Fund for a bailout program.

“We can’t be in an anarchical condition. We have to somehow reach a consensus today,” lawmaker Udaya Gammanpila said.

Opposition parties are also concerned over military leaders making statements on public security in the absence of a civil administration.

Lawmakers have discussed Chief of Defense Staff Gen. Shavendra Silva making a public statement calling on the people’s cooperation to maintain law and order, said Kavinda Makalanda, spokesperson for Premadasa.

“A civil administration is the need, not the military in a democratic country,” Makalanda said.

If opposition parties fail to form a government by the time Rajapaksa resigns, Wickremesinghe as prime minister will become acting president under the constitution. However, in line with the protesters’ demand, opposition parties are keen on not allowing him take over even as acting president.

They say Wickremesinghe should promptly resign and allow Speaker Mahinda Yapa Abeywardena take over as acting president — the next in line according to the constitution.

Rajapaksa appointed Wickremesinghe as prime minister in May in an effort to solve the shortages and start economic recovery. But delays in solving the shortages has turned public anger against him with protesters accusing him of protecting the president.

Wickremesinghe had been part of crucial talks with the International Monetary Fund for a bailout program and with the World Food Program to prepare for a predicted food crisis. The government must submit a plan on debt sustainability to the IMF in August before reaching an agreement.

Sri Lanka is relying on aid from India and other nations as leaders try to negotiate a bailout with the IMF. Wickremesinghe said recently that negotiations with the IMF were complex because Sri Lanka was now a bankrupt state.

Sri Lanka announced in April that it was suspending repayment of foreign loans due to a foreign currency shortage. Its total foreign debt amounts to $51 billion, of which it must repay $28 billion by the end of 2027.

Months of demonstrations have all but dismantled the Rajapaksa political dynasty, which has ruled Sri Lanka for most of the past two decades but is accused by protesters of mismanagement and corruption.

CNN: Echoes of war in Ukraine among the pyramids

There are only a few items in Hanna Ayyad's fridge at any given moment these days. The Cairo street fruit vendor has restricted his family's diet as inflation triggered by the Ukraine war has soared in Egypt.  

"Now we buy new clothes every other holiday," he tells CNN. "We can do without eating meat, buying it once a month, and we may buy chicken two or three times a month, not like before." 

His customers too can only afford a fraction of what they used to buy, shrinking his daily income.  

"Some people used to buy 5kg or 10kg of fruit -- now they can buy 1kg or 2kg at most," he says. It takes him days to sell the same amount of produce he used to sell in one day.   

Egyptian households of all income levels are seeing their spending power erode fast. The economic crisis raises prospects of unrest in a country where a regime was overthrown just a decade ago in an uprising calling for "bread, freedom and social justice."

Moody's credit rating agency warned in May about "social and political risks" as it downgraded Egypt's economic outlook for the year from stable to negative. And the government appears to share those concerns.

Anticipating unrest, President Abdel Fattah el-Sisi has initiated a national dialogue with opposition figures, a change of tack from a crackdown on dissent that has kept thousands of people behind bars for years. 

Egypt's official inflation rate stood at 14.7% in June, up from around 5% at the same time last year, but consumers say prices have skyrocketed beyond this figure since the Russian invasion of Ukraine began in February.

The war in Ukraine has brought uncertainty to global grain markets and driven up prices. Egypt, which depends on Russia and Ukraine for 80% of its wheat imports, now pays $435 per tonne instead of $270 last year, according to the government.

The invasion has also dented Egypt's tourism industry. Russian and Ukrainian tourists used to make up a third of the country's annual visitors but those numbers have dipped.  

At a time when the economy was barely recovering from the slowdown spurred by the Covid-19 pandemic, the war kicked its enduring challenges into high drive.  

An increase in interest rates in more stable markets like the United States has driven an estimated $20 billion out of Egypt , according to the Standard and Poor's credit rating agency.  

"We should all know the gravity of the crisis is not just in Egypt, but all around the world," Prime Minister Mostafa Madbouly said in a televised press conference in May outlining the government response to the "unprecedented" economic crisis.

The direct and indirect impacts of the crisis will cost Egypt 465 billion pounds ($24.6 billion), including providing a social safety net for its citizens, he said.  

The government is seeking more loans -- notably from the International Monetary Fund, which has already lent Egypt $20 billion since 2016. Gulf Arab countries have poured billions of dollars into the country to replenish its dwindling foreign reserves since February.   

One of the main undertakings of the government at the moment is to secure the wheat for its bread subsidies to reach 70 million Egyptians, in a country of about 100 million. It's offering incentives for local farmers to grow wheat and sell it to the government in order to fill part of the expected gap in grain imports. 

Ordinary citizens do not particularly count on the effectiveness of anti-crisis measures.

Ayyad, the street vendor, depends on basic subsidies and government cash handouts. As his income shrinks, he is also cutting down on spending on his sons' education. He watches the news anxiously and fears the situation might get worse.  

Haya Aref, the Egyptian architect, feels like Egyptians are in survival mode "and it's getting a bit scary."  

CNBC: Europe has no illusions about the suspension of Nord Stream 1

Europe is bracing for an extended shutdown of Russian gas supplies as maintenance works begin on the Nord Stream 1 pipeline that brings gas to Germany via the Baltic Sea.

Operator Nord Stream AG confirmed the maintenance works, which are scheduled to run from Monday through to July 21, got underway as planned on Monday morning. Russian gas flows via the pipeline are expected to drop to zero later in the day.

The Nord Stream 1 pipeline is Europe’s single biggest piece of gas import infrastructure, carrying around 55 billion cubic meters of gas per year from Russia to Germany.

Europe fears the suspension of deliveries could be extended beyond the 10-day timeline, derailing the region’s winter supply preparations and exacerbating a gas crisis that has prompted skyrocketing energy bills for households and emergency measures from policymakers.

It comes as European governments scramble to fill underground storage with gas supplies to provide households with enough fuel to keep the lights on and homes warm during winter.

The EU, which receives roughly 40% of its gas via Russian pipelines, is trying to rapidly reduce its reliance on Russian hydrocarbons in response to President Vladimir Putin’s months-long onslaught in Ukraine.

Klaus Mueller, the head of Germany’s energy regulator, believes that the Kremlin may continue to throttle Europe’s energy supplies beyond the scheduled end of the maintenance works.

“We cannot rule out the possibility that gas transport will not be resumed afterwards for political reasons,” Mueller told CNBC last week.

Energy analysts agree that the risk of a temporary interruption is high, particularly as Russian gas flows have already dropped by about 60% in recent months.

Russia’s state-backed energy giant Gazprom has cited the delayed return of equipment serviced by Germany’s Siemens Energy in Canada for its reduced flows.

Canada said over the weekend that it would return a repaired gas turbine back to Germany for use in the Nord Stream 1 pipeline, while also expanding the sanctions against Russia’s energy sector.

Russia said last week that it would increase gas supplies to Europe if the turbine being serviced in Canada was returned. Kremlin spokesperson Dmitry Peskov also dismissed claims that Russia was using oil and gas to exert political pressure over Europe, Reuters reported.

Analysts at political risk consultancy Eurasia Group said that if Putin orchestrated a total cut-off of gas supplies beyond the scheduled end of maintenance works on the Nord Stream 1 pipeline, Germany would likely be forced to move to level three of its three-stage emergency gas plan.

At this level, Germany’s regulator Bundesnetzagentur would need to decide how to distribute gas supplies nationwide.

Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNBC that such a move would represent a “maximum economic warfare” scenario.

“Germany has become a hotspot for the entire EU,” Gloystein said. “Germany has Europe’s biggest population, it’s the biggest economy, it’s the biggest gas consumer, it’s the biggest single importer of Russian gas, and it has got nine land borders. So, whatever happens in Germany spills into the rest of Europe.”

Russia has already cut off gas supplies to several European countries that refused to comply with Putin’s gas-for-rubles payment demand.

“That is actually why though … we think Russia will return a little bit,” Gloystein said. “They want a little bit of a bargaining chip in case the Europeans tighten the sanctions further so then the Russians can retaliate with that.”

A spokesperson for Germany’s Federal Ministry of Economics and Climate Action told CNBC last week that the government was closely monitoring the gas market situation ahead of the scheduled maintenance works.

“Security of supply is currently still guaranteed, but the situation is serious,” the spokesperson said.

Picked and squeezed for you: Irina Iakovleva