Uber Battle Escalates as Investors Try to Intervene in Benchmark Lawsuit

A battle among shareholders over Uber Technologiesescalated on Thursday as some investors sought to fight a lawsuit by shareholder Benchmark Capital against ousted Chief Executive Travis Kalanick.

In a letter to the Uber board of directors seen by Reuters, Shervin Pishevar, a venture capitalist with Sherpa Capital who is an Uber investor and critic of Benchmark, said he was seeking to intervene in the lawsuit filed August 10.

He said Benchmark’s effort to remove Kalanick from Uber’s board was aimed at gaining control of the company.

“If Benchmark insists on trying to use the courts to try to take over this company, we are committed to doing everything we can to try to stop this abuse,” Pishevar wrote in the letter sent Thursday.

The conflict playing out in public marks a rare turn of events for Silicon Valley. It is extremely unusual for a venture firm to sue the central figure of company it has backed and equally unexpected for fellow investors to make a highly public counter-move.

The legal dispute started two weeks ago when Benchmark sued Kalanick in Delaware’s Chancery Court to force him off Uber’s board and rescind his ability to fill three board seats.

Benchmark owns 13 percent of Uber and controls 20 percent of the voting power. After an initial investment of $12 million, its stake in Uber is now worth almost $9 billion (roughly Rs. 57,692 crores). Kalanick holds about 10 percent of Uber stock and about 16 percent of its voting power.

Kalanick has called Benchmark’s lawsuit “a public and personal attack” without merit and called for the dispute to be moved to arbitration, according to court filings.

Pishevar and fellow Uber investor Stephen Russell have come to Kalanick’s defence. In their motion to intervene in the lawsuit, Pishevar and Russell blasted Benchmark’s “dirty tactics” and “public smear campaign” against Kalanick. In the document, they called Benchmark’s lawsuit a “transparent” effort “to unscrupulously gain control of Uber’s board of directors.”

The motion was filed by Russell and Sofreh LP, Pishevar’s partnership. A copy of motion was provided to Reuters by a source close to the matter. A judge must rule on the investors’ request to intervene in the lawsuit.

Benchmark’s lawsuit accuses Kalanick of fraud in concealing misdeeds from the board when last year he requested the board add three seats that he would have the sole right to appoint. Board members, including Benchmark, approved.

The lawsuit says the firm never would have approved the request had it known about the misconduct, including details of an alleged theft of trade secrets that has led to a high-stakes legal fight with Alphabet Inc’s self-driving car unit, Waymo.

The legal battle could determine who wields power at Uber as the world’s largest venture-backed company looks for a new CEO to help it overcome a year of scandals, rebuild its tarnished image and turn it into a profitable business.

Uber Battle Escalates as Investors Try to Intervene in Benchmark LawsuitKalanick was forced to resign as CEO in June, when shareholders representing about 40 percent of the company’s voting power signed a letter asking him to step down, following a succession of scandals at the company ranging from sexual harassment to using software to evade regulators in certain cities. Kalanick remains on the board and is involved in the company’s search for a new CEO.

Pishevar has in two previous letters called on Benchmark to step down from the board and sell the majority of its Uber stake. Benchmark, an early Uber investor, has a seat on the company’s board, and Pishevar’s firm does not.

Benchmark says Kalanick is ‘corrosive’
Benchmark doubled down on its allegations against Kalanick on Thursday with a new court filing that accused Kalanick of having a “corrosive influence” on the ride-services company and arguing that a Delaware court should decide Kalanick’s future on the Uber board, not arbitrators.

Removing Kalanick from the board is necessary “to ensure Uber is protected from Mr. Kalanick’s corrosive influence and can promptly obtain the new leadership it needs to move forward,” Benchmark’s court filing said, referring to Uber’s search for a new CEO.

A spokesman for Kalanick said Benchmark’s latest court filing relies on meritless personal attacks against Kalanick with no legal basis.

Netflix to Add UPI Support With Auto Recurring Billing Option Soon

India’s Unified Payments Interface (UPI) will soon find another international backer. Netflix plans to roll out support for UPI payments in the country, a source familiar with the matter told Gadgets 360.

The on-demand streaming service will introduce the new payment option after the rollout of UPI 2.0, the source said, requesting anonymity. UPI 2.0, expected to roll out later this year, is the upgraded version of UPI protocol which will offer a range of new capabilities, including programmable electronic mandates that can enable auto-renewable billing option.

Earlier this year, Netflix had held advance talks with One97 Communications for introducing support for recurring billing option with mobile wallet Paytm, three sources told Gadgets 360. But in the past three months, those talks have hit a wall, a source said. Music service Gaana accepts Paytm as an option, but it requires users to punch in their credit/ debit card number for approval. Netflix couldn’t get over this limitation.

“We already have credit card billing so introducing a wallet provider as a middleman makes no sense,” the source told Gadgets 360 recently. There was one more limitation that emerged as a deal breaker. “On top of that, Paytm money cannot be used to pay cross-border,” the source told Gadgets 360. Netflix had internally built the tech back-end and user interface and design flows for Paytm payments option, but then it put it in “cold storage,” the person said. A Netflix spokesperson declined to comment, as did Paytm’s.

At a point, Netflix also considered opening its own “accounting and legal liabilities if we use our Mumbai subsidiary to accept subscription payments,” the source said. “While that’s not too difficult to work around, I don’t think it’s worth it. Paytm is simply not worth hiring more accountants in India.”

The move would help Netflix extend its reach in India. At present, the company only supports credit cards — and select debit cards with international purchases enabled — for payments. Penetration of both remains low in the country.

Netflix to Add UPI Support With Auto Recurring Billing Option SoonThe arrival of Netflix will lend further credibility to UPI, which in the recent months has attracted several international players. Earlier this week, Uber introduced support for UPI payments on its platform. Facebook, Amazon, and Google have also been working with NPCI to introduce UPI-based payments solutions in their apps, multiple people familiar with the matter said.

And many more Indian and international companies may jump ship too. At present, several services rely on wallet apps to allow their customers to make payments seamlessly, without resorting to passwords and OTPs associated with card usage in India. They will soon have little reason to not support UPI on their platforms.

Introduced just last year, UPI is already raking in big numbers. Even as the volume of transactions via UPI-powered apps is much lower than that of Prepaid Instrument (PPI; mostly wallet apps), it is already being used to exchange more money. According to figure provided by RBI for the month of July, UPI-powered apps were used to do 11.4 million transactions and exchange Rs. 33.8 billion. In comparison, PPI had seen 88.7 million transactions, but only Rs. 25.1 billion changed hands.

Uber Hikes Hong Kong Fees Amid Legal Troubles

Uber Technologies Inc on Monday hiked its Hong Kong fees by up to 80 percent after a review of its business there, the embattled ridesharing company said, adding it was not having issues financing its operations in the Asian financial hub.

The San Francisco-based technology company, which recently suspended its services in the neighbouring Chinese city of Macau for the second time, told Reuters the price rise would benefit drivers as they pocketed most of the fares.

Starting on Monday fees for UberX and UberASSIST rides would rise by up to 80 percent to start at HKD 45 ($5.75), and a ride with the pricier UberBLACK would start at HKD 65 instead of HKD 50. The company said in a statement the adjustments were “based on an evaluation of the marketplace in Hong Kong.”

Uber Hikes Hong Kong Fees Amid Legal TroublesHong Kong authorities have clamped down on Uber’s operations multiple times, with the latest crackdown in May when police arrested 21 drivers for illegal car-hiring.

A Hong Kong court found five Uber drivers guilty of the same crime in March and fined them HKD 10,000 each. Uber has said it would help the drivers to appeal and criticised authorities for failing to keep up with innovation.

“We are committed to continue our investment here in Hong Kong,” the company said in its statement.

Hong Kong is not the only Asian city where the company has run into regulatory problems, as it also faces legal scrutiny in Korea, Japan and Taiwan.

Early Uber Investors Call on Company to Change ‘Destructive Culture’

Early investors in Uber Technologies Inc wrote to the ride-hailing company on Thursday to criticise it for failing to end a toxic culture of harassment.

Early Uber Investors Call on Company to Change 'Destructive Culture'

Mitch and Freada Kapor publicly rebuked the company after former Uber employee Susan Fowler described in a blog how she was sexually harassed by a manager and that human resources and upper management refused to punish the offender and even threatened her with a bad performance review.

“Uber’s outsize success in terms of growth of market share, revenues and valuation are impressive, but can never excuse a culture plagued by disrespect, exclusionary cliques, lack of diversity, and tolerance for bullying and harassment of every form,” the Kapors wrote in an online letter.

The Kapors are the only investors to have publicly commented on the recent allegations against Uber. The couple runs the Oakland-based Kapor Center, which works to promote diversity and inclusion in technology.

“Uber has had countless opportunities to do the right thing,” they wrote. “We feel we have hit a dead end.”

Several other Uber investors and board members did not immediately respond to requests for comment. Menlo Ventures, which led Uber’s Series B financing in 2011, declined to comment.

Uber did not directly address the Kapors’ letter but repeated its commitment to investigate Fowler’s claims. Uber has hired former US Attorney General Eric Holder to lead the investigation alongside attorney Tammy Albarran.

“We will be thorough, impartial and objective, and we are conducting this review with the highest degree of integrity and professionalism,” Holder and Albarran said in a statement on Thursday in response to the Kapors’ letter.

The Kapors, though, called out conflicts of interest that may hinder the investigation. Holder has been working for Uber since June to dissuade lawmakers from requiring fingerprint background checks for drivers. He will be joined by Uber board member Arianna Huffington and the company’s HR chief.

“We are disappointed to see that Uber has selected a team of insiders to investigate its destructive culture and make recommendations for change,” they wrote.

The Kapors’ letter raised eyebrows in Silicon Valley where investors usually defend their startups.

“I applaud the honesty of the Kapors for commenting on these highly sensitive issues and highlighting the importance of culture in the workplace,” said Susan Lucas-Conwell, former CEO of Great Place to Work and adviser to technology companies on diversity and inclusion. “I can’t think of when I’ve see such a statement from an investor of a company such as Uber.”

Trump Immigration Ban: Uber, Lyft React as Tech Industry’s Opposition Escalates

The tech industry’s opposition to President Trump escalated Thursday as corporate leaders drafted a letter warning of the economic risks of his immigration policies, Uber’s chief executive quit an administration advisory board, and Lyft pulled its ads from Breitbart News, the site founded by the White House chief strategist Stephen Bannon.

Trump Immigration Ban: Uber, Lyft React as Tech Industry's Opposition Escalates

The developments followed remarks this week from Apple, Amazon and other companies, which said they were exploring legal action against Trump’s executive order that temporarily barred travelers from seven majority-Muslim countries. Amazon and Expedia also joined a lawsuit brought by the state of Washington against the immigration ban.

The actions underscored rising alarm along the West Coast’s tech archipelago from Silicon Valley to Seattle that Trump’s policies threaten a sector that has long been a driver of new wealth and innovation in an otherwise tepid economy. After attempting to reach out to Trump by attending a meeting at his hotel in New York, tech companies are readying themselves for a high-stakes confrontation with the president.

Trump’s quest to tighten immigration has struck particularly hard at left-leaning Silicon Valley, which relies on a flow of high-level talent from India, East Asia and elsewhere and sees diversity as core to its identity as an innovation hub.

“People come to Silicon Valley so they can build the American Dream, and this is one of the last places where the American Dream still kind of works,” said Jonathan Nelson, chief executive of Hackers/Founders, a 300,000-person global network of entrepreneurs and engineers. “If this happens, you’re going to completely kill the next 10 years of tech companies.”

Some tech companies are now mulling whether to move jobs out of the United States to places with more relaxed immigration policies, such as Vancouver. B.C., and Dublin, which have made clear they would welcome an influx of US-based immigrant technology workers.

“One of the sad ironies of this is that an administration that purports to understand business is threatening one of the core pillars of what has made Silicon Valley so successful and an engine of economic growth,” said Matt Mahan, chief executive of the social networking startup Brigade.

Tensions have been building since Friday night, when tech executives including Apple’s Tim Cook and Google’s Sundar Pichai began publicly denouncing the immigration ban. Protesters flooded US airports and held rallies outside Google’s offices. In a flurry of emails and late-night phone calls among top executives, the industry began preparing a range of responses.

Just over half of US startups that are estimated to be worth more than $1 billion were founded by immigrants, according to the Arlington think tank National Foundation for American Policy. And Silicon Valley is littered with immigrant success stories: Satya Nadella, the chief executive of Microsoft, is an immigrant from India; Google co-founder Sergey Brin is a refugee from the former Soviet Union; and Omid Kordestani, Twitter’s executive chairman, was born in Iran.

Apple co-founder Steve Jobs was the son of a Syrian immigrant, leading Cook to say, in a letter denouncing Trump’s travel ban, that the company “wouldn’t exist” if such a ban had been in place.

Sam Altman, the president of the Silicon Valley Y-Combinator, called the reaction to the immigration ban a watershed moment in which the tech industry – rivals and all – made the unusual move of coming together and drawing a line in the sand against a sitting president.

The steps taken by tech companies become more urgent after a draft of what appeared to be a Trump administration executive order limiting workers on H-1B visas circulated widely in Silicon Valley this week.

AThe leaked order indicated the administration could cancel the annual lottery through which technology companies sponsor tens of thousands of engineers, as well as a special visa for start-up founders who want to move to the United States.

A spokesman for the White House declined to comment on the leaked order or confirm its veracity. But White House press secretary Sean Spicer told reporters this week that the administration expects to scrutinize work-visa programs closely as part of its immigration agenda.

“There’s an overall need to look at all of these programs,” said Spicer. “And you’ll see both through executive action and through comprehensive measures a way to address immigration as a whole and the visa program.”

As tensions built throughout the week, Uber chief executive Travis Kalanick and Tesla’s Elon Musk, who serve on Trump’s economic council, faced intense pressure to disavow their work with the administration, according to people familiar with the situation. Both have insisted, until now, that being at the table and having the opportunity to influence the direction of the country was better than not doing so.

But on Thursday, Kalanick said that he had spoken with Trump and told him that he would step down. Musk declined requests for comment.

Kalanick’s calculus changed after the company faced a huge outcry from the public for not joining Saturday’s protests at airports.

In his letter, Kalanick said he made his decision after hearing the stories of Uber employees and drivers, singling out Emil Michael, a refugee from Egypt, and Thuan Pham, a refugee from Vietnam.

Kalanick wrote the executive order was “hurting people across America, and hurting Uber’s ability to make positive change in the country. “The implicit assumption that Uber (or I) was somehow endorsing the Administration’s agenda has created a perception-reality gap between who people think we are, and who we actually are,” he wrote. “There are many ways we will continue to advocate for just change on immigration but staying on the council was going to get in the way of that.”

In separate letter, more than 115 Silicon Valley startup founders and venture capitalists pleaded with the administration to cancel the immigration ban.

“Silicon Valley flourishes because of our free and open culture of entrepreneurship and excellence,” they wrote. “The President’s actions yesterday not only negatively affect Tech’s competitiveness, they hurt the US economy overall.”

Another letter from executives at Facebook, Google, Microsoft, Apple and others is also being drafted, according to a person familiar with the deliberations who spoke on the condition of anonymity to discuss the private matter.

In interviews, technology company officials said they were looking into relocating people to overseas offices in Ireland and other places in Europe. The officials spoke on the condition of anonymity because the deliberations were still underway.

“Tech companies are telling me they would rather set up subsidiaries or set up their companies in countries that are more welcoming and have friendlier immigration laws,” said Priya Alagiri, an immigration lawyer based in San Francisco who represents startups and tech firms. They go to great lengths [to keep immigrant workers] because the workers are so highly talented and highly skilled.”

Meanwhile, Lyft, Uber’s ride-hailing rival, said Thursday that it was pulling ads from Breitbart News, following the actions of hundreds of other companies including Lenovo, HP, and T-Mobile. Many of the firms criticised the site for being an anti-immigrant and racist platform.

“One of Lyft’s core values is to uplift and support one another in all that we do,” said Adrian Durbin, Lyft’s director of communications. “We strive to ensure that our advertisements appear only on sites that share this value.”