US justice department inquiry comes after Uber acknowledged using software to identify and circumvent clampdowns by government officials
The US Department of Justice has begun a criminal investigation into Ubers use of a software tool that helped its drivers evade local transportation regulators, two sources familiar with the situation said.
Uber has acknowledged the software, known as Greyball, helped it identify and circumvent government officials who were trying to clamp down on Uber in areas where its service had not yet been approved, such as Portland, Oregon.
The company prohibited the use of Greyball for this purpose shortly after the New York Times revealed its existence in March, saying the program was created to check ride requests to prevent fraud and safeguard drivers.
The criminal inquiry could become a significant problem facing a company that is already facing a torrent of bad publicity including accusations of sexual harassment and revelations of a secret Hell program that tracked drivers as well as a major lawsuit brought by Google.
An Uber spokesman and the justice department declined to comment. Uber lawyers said in letters to Portland authorities, which the city made public in a report last week, that the Greyball technology was used exceedingly sparingly in that city, before the service was approved there in 2015.
The nature of any potential federal criminal violation, and the likelihood of anyone being charged, is unclear. The investigation is still in its early stages, the sources said.
Bloomberg news service reported the existence of a federal inquiry last week, but did not identify it as criminal.
Uber received a subpoena from a northern California grand jury seeking documents concerning how the software tool functioned and where it was deployed, one person familiar with the request said. That indicates a criminal investigation is underway. The second source confirmed that was the case.
A subpoena from a grand jury is a formal request for documents or testimony concerning a potential crime. It does not, in itself, indicate wrongdoing or mean charges will be brought.
The ride-hailing companys board has retained an outside law firm, Shearman & Sterling, to conduct its own internal investigation into what transpired, those two sources and a third said.
A Shearman spokeswoman did not return a message seeking comment.
Uber, which was most recently valued at $68bn, has long had a reputation as an aggressive startup and has been battered with multiple controversies over the last few months that have raised questions about chief executive Travis Kalanick. In March, a video showing him arguing with his own Uber driver over the companys treatment of drivers prompted him to publicly apologize and say that he he needed leadership help.