Uber Says Whistleblower Was Extorting the Company

By Kate Conger on at

The drama surrounding an explosive letter written by former Uber employee Richard Jacobs keeps heating up, with Uber executives testifying in court to try to undermine it.

The letter claimed Uber’s Marketplace Analytics team used the encrypted, ephemeral chat app Wickr and worked on secret servers and devices that couldn’t be traced back to Uber in order to steal confidential information and trade secrets from competitors. It emerged this week in connection with the lawsuit in which Waymo alleges that Uber stole its trade secrets. The trial was scheduled to start next week, but based on the letter, US District Judge William Alsup delayed the trial until he could determine whether Uber had withheld evidence.

Today, Uber’s deputy general counsel Angela Padilla claimed the former employee made the claims in the letter in an effort to extort Uber. At the time, Jacobs, a former member of Uber’s security team, had threatened to sue the company—but Uber ultimately settled with him for millions of dollars. During his testimony yesterday, Jacobs said some of the claims made in the letter were not accurate and that he hadn’t had much time to review it before his lawyers sent it to Uber.

Padilla said Uber voluntarily disclosed the existence of the letter to the US Attorney’s Office in June and to courts in New York and California in September. The company decided to disclose the letter to the government to preempt Jacobs, who had threatened to go to the government himself, Padilla said.

The letter also made its way to several members of Uber’s board, she testified, including Benchmark general partner Bill Gurley, Uber co-founder Garrett Camp, Uber’s SVP Ryan Graves, TPG founding partner David Bonderman, Nestle executive Wan Ling Martello, Arianna Huffington, and Travis Kalanick. Salle Yoo, Uber’s former chief legal officer, also saw the letter, although she did not sit on the board.

Padilla described Jacobs as an extortionist who made explosive claims about what Uber was up to in order to score a payout. Uber ultimately reached a $4.5 million dollar (around £3.3 million) settlement with Jacobs, and paid an additional $3 million (around £2.2 million) to his lawyers. As part of the settlement, Jacobs is working as a consultant on Uber’s internal investigation into his claims. It’s unclear what Jacobs’ lawsuit was over

Judge Alsup argued that Uber would not have made such a massive payment to Jacobs if there was no merit to his claims. “You said it was a fantastic BS letter, nothing to it. And yet you paid $4.5 million dollars (around £3.3 million),” he said. “That is a lot of money and people don’t pay that kind of money for BS. You certainly don’t hire them as consultants if you think everything they have to offer is BS.”

Jacobs was caught moving confidential documents from Uber to his personal email account, Padilla explained. “He was stealing those documents in order to be a whistleblower,” she said. When he was confronted, he sent an email to Kalanick and other senior Uber executives with the subject line “criminal and unethical activities in security” and resigned shortly after.

The email mentioned Waymo and ATG (Uber’s Advanced Technologies Group, which leads its autonomous vehicle development). However, his email was not turned over to Waymo’s lawyers during discovery because the term “waymo” was not included in the list that Waymo asked Uber to search for.

During the hearing, Uber CEO Dara Khosrowshahi announced on Twitter that Uber employees were no longer allowed to use Wickr for workplace communications. “True that Wickr, Telegram were used often at Uber when I came in,” he wrote. “As of Sept 27th I directed my teams NOT to use such Apps when discussing Uber-related business.”

Two executives from Uber’s security team, Mat Henley and Nick Gicinto, testified that Wickr was not used to communicate about trade secret theft. However, Henley and Gicinto revealed that Uber did conduct surveillance on its competitors. Henley said he tasked staffers with surveilling the routes used by a competing autonomous vehicle developer, and Gicinto said that he had received an audio recording of staffers from the overseas ride-hailing companies Didi Chuxing and Grab.

The trial, which was scheduled to begin next week, has been delayed until February. Waymo will use the extra time to dig into the claims made in the Jacobs letter and try to determine whether it was ever a target of Uber’s surveillance.


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