Uber's return to the headlines this week, following revelations it paid off hackers in a bid to conceal a breach of 57 million accounts late last year, could be just the event Dara Khosrowshahi needs to herald a new era of transparency at the world's most-valuable start-up.
Uber admitted Tuesday it had paid hackers $100,000 for "assurances" that they had destroyed a set of names, emails and phone numbers stolen from millions of riders and keep the theft quiet. Although financial information was not taken, the drivers' license numbers of about 600,000 drivers were accessed. The revelation is another blow for a company that is dealing with multiple scandals and boardroom infighting, but could this be good news, in a roundabout way, for Uber's new boss?
In response to the breach, he immediately fired Chief Security Officer Joe Sullivan and his deputy, Craig Clark, for their roles in the breach and subsequently covering it up. He also issued a carefully-worded conciliatory statement.
"None of this should have happened, and I will not make excuses for it ... While I can't erase the past, I can commit on behalf of every Uber employee that we will learn from our mistakes."
And mistakes were made.
Khosrowshahi must have known when he took the role of CEO less than three months that there would be challenges. He adopted a raft of legal issues, including federal probes into targeting rivals and a legal battle with Google's parent Alphabet Inc. (GOOGL - Get Report) over trade secrets related to autonomous cars. There are also claims the company tried to cover up sexual harassment claims from a female employee.
The breach, which took place in October 2016, was not disclosed to authorities or to the people whose data was stolen. Former CEO Travis Kalanick learned of it in November of that year and took immediate steps to rectify it, although you ordered the money to be paid wasn't made clear.
In showing a change in direction of Uber, once Khosrowshahi found out about the leak and cover-up, he ordered an investigation into it, fired the employees and hired a cyber security expert Matt Olsen, who is a former general counsel at the National Security Agency.
The company is also offering credit to riders that had their data stolen. Khosrowshahi in what can be seen as a change for the company is being completely transparent about the steps that are being taken.
The new CEO also showed a change in direction for the beleaguered company when he flew to London to meet with transportation officials after the city took away Uber's operating license. The company is still appealing the decision.
He does have a lot riding on this, and not just his reputation, there is also the matter of an investment by Japan's Softbank Corp. (SFTBY)
On Nov. 12, Uber's warring board members struck a deal that would allow the multibillion dollar investment and resolve a legal battle between Kalanick and venture capital firm Benchmark Softbank and Dragoneer Investment Group led a group that will invest in Uber. While Uber did not disclose terms, the deal reportedly involves a $1 billion investment and $9 billion to purchase shares of existing shareholders.
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