If we’ve said it once, we’ll say it again: Competition can get pretty fierce in the world of on-demand transportation. Consumer demand for better, faster and more convenient car services has exploded and top startups are racing to meet the opportunity. As an early mover in the space, Uber is used to pushing back against unwelcoming opposition, having done battle with unions, legislators and more as it’s expanded into new markets in the U.S. and overseas.
However, as we reported last week, an Uber competitor has now made it clear that the company’s enterprising and aggressive approach to sales (and expansion) have likely crossed the line.
Gett, formerly GetTaxi, brought a rival black car service to New York City for the first time this fall. Soon thereafter, Gett crossed a $100 million annual run rate, thanks in large part to its strong international presence. Naturally, the startup’s entrance into an already hyper-competitive New York market did not go unnoticed.
As we reported, over the course of three days during the week of January 13th, Gett alleged that Uber employees launched the “real world” equivalent of a DDoS, or denial-of-service, attack, ordering and canceling more than 100 of its cars. Evidence provided to TechCrunch at the time showed that more than one dozen Uber employees had worked simultaneously to request rides from its competitor, in some cases waiting until the cars had nearly arrived before canceling their orders.
Having obtained drivers’ numbers as a result of ordering the rides through the app, Uber employees then texted as many of the Gett drivers they could in an attempt to recruit them, offering cash incentives to those for those willing to switch into its camp.
From Gett’s perspective, this was “uncool” for a number of reasons, chief of which was the disruption of its newly-established New York business. However, to Uber’s credit, it responded to the allegations with a public apology, admitting that it had in fact attempted to recruit Gett drivers, and saying that its “local teams can be pretty determined when spreading the word about Uber and how [the company’s] platform opens up new economic opportunities for drivers.”
While that could have been the end of it (and perhaps should have been), Gett isn’t satisfied. The startup heard Uber’s apology acknowledging that it screwed up — but saw that apology as more of an appeasement measure aimed at customers and vocal opponents on Twitter.
The particular sticking points for Uber’s competitor involved its claims in its public statement in which it said that members of its New York team had made these requests to “generate leads of independent contractors” but had in fact “cancelled those requests seconds later,” and paid “cancellation fees for these requests.”
The company also defined its requests as “sales tactics” — even if qualified by the admission that they were “too aggressive.”
Gett, simply put, seems to think that, when it comes to taking responsibility for potentially anti-competitive behavior, this was the bare minimum as far as apologies are concerned. That Uber’s statement, in reality, was the equivalent of apologizing, but saying, “hey, we’re an aggressive company with go-get-‘em sales tactics and we shouldn’t have done that, but ‘no harm, no foul’ because we cancelled seconds later and paid any necessary fees.”
In a follow-up statement today, Gett is firing back with more evidence, saying that Uber’s attempt to shift focus away from their transgression is unfair and that their presentation of the situation as the result of well-intentioned but “too aggressive” marketing tactics doesn’t quite do it justice. According to evidence provided to TechCrunch, this was not simply a random, rogue employee going off the reservation.
Gett’s original claims were that not only do the dozen or so Uber employees whose names appear on the order include a social media manager, operations manager, community manager and general manager, but that more than one Uber employee created multiple accounts using different, potentially false names.
In other words, this wasn’t just a dozen employees using their real first and last names, but multiple employees using, say, their first name and middle name, or variations thereof. Uber General Manager Josh Mohrer, for example, allegedly created two accounts, one being “Josh Martin” and the other being “Jim Martins.”
For one of those names, Mohrer allegedly provided an invalid credit card and requested rides not just from the Uber offices or one individual location, but multiple rides originating from all over Manhattan and the outer boroughs — from Times Square to La Guardia.
The majority of these rides took place over the course of one hour, Gett says, at the very least making it difficult to contend that Mohrer was in all of those places at once. To add further fuel to its claims, Gett also alleges that Mohrer was far from alone in this behavior, as multiple Uber employees used invalid credit cards and removed that information after canceling their rides.
When asked what purpose Gett had in coming forward with this kind of information, Gett CEO Jing Herman said that “driver information is not for sale and indulgences don’t go for $10.” She also said that Uber had managed to recruit one of Gett’s drivers since then, and the company wants to make sure that this kind of behavior does not continue.
As to whether Gett planned to pursue legal action against Uber? The CEO said that the company had not made a final decision yet on this front and is “evaluating its options.”
TechCrunch asked former Federal Prosecutor Fred Tocce whether or not he thought Uber’s actions potentially warranted more serious, er, legal action from Gett. Tocce, whose firm Panitch Schwarze Belisario & Nadel, specializes in intellectual property law, including unfair competition, and who himself has worked on over 200 cases in this area, said, in short, “yes.”
Elaborating, the former federal prosecutor said that Gett would potentially “have a number of viable causes of action against Uber under New York law” — as well as the laws of many states in the U.S., he added. Tocce cited potential causes of action as including but not limited to, unfair competition, tortious interference with contractual relations and tortious interference with prospective contractual relations.
If the false credit card part of the scheme were true, Tocce continued, then there could also be cause for action for fraud and conversion, but in all cases, it would be a matter of showing that Uber’s conduct caused harm and just how much harm to business it actually caused.
In the end, however, Gett has thus far been content to let this play itself out in the press, rather than enter into a lengthy and potentially expensive legal battle against one of the largest companies in the space.
Of course, if one were to view this situation from the other side of the table, one might say that Gett is also taking advantage of the incident and is, overall, on a mission to use Uber as a focal point around which to base some of its own marketing; particularly around the fact that Gett does not use surge pricing as Uber does during peak hours, for example. Which, for some, might be a deciding factor in choosing between two rival car services.
When TechCrunch reached out to Uber for a response, the company again apologized and reiterated its previous response:
We apologize for the tactics used to recruit drivers in NYC a couple of weeks ago and took steps to ensure that it does not occur again … We believe that the Uber platform is the best option for drivers to maximize their incomes and become their own entrepreneurs. As we were working to bring more drivers on the Uber platform quickly to meet consumer demand, the NYC team got overzealous in getting the word out to drivers.
Uber also contended that what is likely the case is that, while some employees might have used their first name and maiden names, they weren’t looking to actively conceal their identity or produce fake accounts. Furthermore, to their knowledge, all of the credit card information provided was authentic, although there was one instance in which an employee had a card authenticated by had removed the information once it triggered fraud protection at their bank.
To that, Gett responded saying that, like other car services (including Uber), it used Braintree to process payment information, intimating that it wasn’t using some kind of alternative or unusual system or tools to process payment information. COO Adi Vaxman explained, saying that Gett “authenticates cards at the time the account is opened and also runs a small pre-authorization amount when a ride is requested, similar to all mobile app vendors.” In the event that a pre-authorization fails, he added, the user is then “prompted to update their payment method in order to pay for their ride.”
According to Gett, the Uber users in question did not in fact update their payment information. When the cancellation fees were later processed, the company learned that some of the cards were invalid while others were removed from the accounts entirely, and that Gett “could not charge all users due to invalid credit cards and cards being removed,” the CEO said.
For now, it is up to readers to decide what to make of this unfolding story, but from the facts presented by both sides, it doesn’t exactly look like there are too many ways to spin this in Uber’s favor. Yes, stories like this could work in Uber’s favor, portraying it as the market leader and the incumbent, but that’s not going to be much of a surprise to anyone familiar with on-demand car services.
In reality, what could potentially be more interesting, and worth more conversation, is how leaders in a space that doesn’t exactly have 10,000-foot barriers to entry react when competition arrives (and they may not have IP to protect them). What defines appropriate, and fair conduct for those leaders — and for the startups that hope to compete with them?
Is this a case of all’s fair in love and on-demand transportation, or is this something that Uber needs to be held accountable for? You be the judge.