Wednesday, November 19, 2014

How Uber crossed the line with its threats against Sarah Lacy

You probably know that, at a dinner last Friday, Uber Senior Vice President Emil Michael suggested that his company should hire four top political opposition researchers and four journalists to investigate the personal lives and families of journalists who write negative articles about the company. Michael focused his anger on PandoDaily's founder Sarah Lacy, and said that the Uber "smear team" could, according to BuzzFeed's Ben Smith, "...in particular, prove a particular and very specific claim about (Lacy's) personal life."

Since BuzzFeed broke the story, there's been a firestorm of media attention, which led to apologies from Michael and a tweetstorm from Uber head Travis Kalanick, in which he disavowed Michael's statements and said that they didn't represent Uber, but that he wouldn't fire Michael. Uber's response, or lack thereof, hasn't dampened the firestorm one bit, and the company has managed to alienate much of the press that it needs for future publicity.

One thing to keep in mind is that it's been long-standing policy at some tech firms to retaliate against journalists and publications that report stories negative to the the companies' interests. Apple and Microsoft are most notorious for doing this, but many other companies in Silicon Valley have done the same. However, with one known exception, the method that the companies have used is to withhold information from the targeted journalists. Both Microsoft and Apple have documented cases in which they barred certain journalists and publications/websites from embargoed previews of new products, reviews of unreleased products and announcement events. Without access to new and forthcoming products, those journalists and publications were at a competitive disadvantage, because they couldn't review or cover the products until they were released.

Where Michael's threat crossed the line is that it moved from withholding proprietary information, which any company has the right to do, to digging up and revealing negative information about journalists with the intent of damaging or destroying their reputations. Even in the one case that I mentioned above, which was Hewlett Packard's hiring of private investigators in 2006 to identify the source of leaks by lying to phone companies in order to get journalists' call records, HP's objective was to find out who leaked the information, not to gather information to destroy the reputations of the journalists.

Both Michael and Kalanick have characterized Michael's remarks as, essentially, a revenge fantasy rather than anything that the company would actually do. However, by making the statements in front of Kalanick at the dinner, and with Kalanick not disavowing them immediately, both Michael and Kalanick reinforced the increasingly common view of Uber as an amoral, out-of-control company that will do anything in order to win, up to and including breaking the law and ignoring court rulings. I would remind Kalanick and Uber that Microsoft had the same philosophy, and believed that it was too big to touch by anyone. However, both the U.S. Justice Department and European Union successfully prosecuted Microsoft for antitrust violations. That in turn led to a loss of management focus, disillusionment and loss of morale for employees and damage to Microsoft's reputation, all of which contributed to the company's decline and loss of direction.

In essence, unless Uber starts making fundamental changes in the way that it does business, it's setting itself up for an eventual battle (or battles) that it can't win. There is always someone who can take you down if they really want to.
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