Why Is Uber Under So Many Investigations?

Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Uber, the scandal ridden driving a ride sharing service, is uh evidently reportedly the subject of two additional, formerly undisclosed investigations, and here to talk about why this company has been uniquely targeted by regulators and lawmakers. I want to bring in Max Chafkin, who writes for Bloomberg Business Week and joins us UH, to talk a little bit about this. So, Max, you know, what is it about Uber that has made

it subject to so many investigations? Right? So, as you said, we we've learned. My colleague Eric Newcomer reported earlier this morning that first of all, there is an additional criminal probe that's looking into Uber's alleged theft of trade secrets from Google, and another one looking at price fixing. I think the answer to the question I asked of of sort of what was going on and and this is in the piece, but the company had kind of a culture of I guess you might say rule bending, uh

and and and some might call it legal innovation. And I think that's that's a term that some people inside of you Uber had used might call it cheating, right, yeah, And that's and that's something I think we've seen before in the financial services industry, where these financial services innovations sometimes uh, you know, push into areas of you know, breaking ethical rules or even criminality. Well, Max, I wont if you get to tell us about the executive ranks

of Uber. Who's there to actually fix the company and then justify its multibillion all the valuation so so uh recently Travis Kalenik Uh this this the former CEO, a guy who sort of most closely associated with the founding of Uber. Step down. There's a new CEO, the former Expedia CEO, Dera Coastra Shah. He hope hope on getting

that one right, um, but on the pronunciation. But he's been basically doing a an apology tour and and sort of going around from to to offer, from office to office to office, trying to sort of turn the page and say, this is not going to be a company that sort of by default bends the rules. And we're learning that he is looking into some of these sort

of you might call them counterintelligence programs. It appears that Uber had kind of almost its own personal, sort of private spy service that was run by the former General Council, the former Chief Security officer. Right. So, just to get a little bit more specific about what the allegations are, we talked about their program called Hell that that's what they named, that basically tracked other competing ridesharing services where they were to allow Uber drivers to go compete with

them more directly. They also kind of cloaked themselves sometimes Uber drivers and would arrive instead of some of the other competing rides sharing services. These are among uh, some of the services that they provided that are being targeted by regulators. Yeah, I mean when you when you take a step back, you brought up Hell there. There was also a program, similar program in Australia that was designed to it seems like spy on maybe you might say

UH an Asian uh a taxi service UM. Basically in all sorts of ways, it appears that that engineers inside of Uber kind of broke with norms as far as privacy and and uh sort of uh, you know, data securities concerns. So so for instance, they were routinely uh calling cabs from from Lift, a competitor, and and basically trying to hire those drivers. They were routinely scraping data from other services, and and this this thing called gray Ball,

which is a subject of another investigation. They were sort of routinely trying to identify police and law enforcement officers and try to make it more difficult for those people to use the app, basically giving law enforcement um fake data allegedly. So it's a whole bunch of it's a

whole swirl of things. You start to add it up, and and obviously it looks like a culture of uh that that's problematics at least, you know, Max said, it makes me maybe considered that you know, with a hefty valuation, Uh, may be considered that How is that it justified when you have competitors that may offer exactly the same kind

of service without these legal problems? I mean, what competitive advantage do they have that they got a list of clients and everyone has the app, but everyone's got the other app. And they're the same clients. Yeah, And I mean this this gets to a pretty significant issue for Uber, which is, right now, they are trying to raise money, raise a big boatload of money from soft Bank, including some of this money is going to buy out existing shareholders in an auction, and we don't know exactly what

the valuation is going to be. Is it going to be you know, closer to to Uber sort of on paper valuation around seventy billion, or is it going to be more like fifty build billion or something like that. And and and the fact is that I think I think investors might might be asking questions about sort of how brittle is Uber's business, how how how secure? Why not invest in lift or why not invest in any

of the other rides sharing services? Because the thing is, it's supposed to be asset light, right, So you don't put all your capital into the automobiles. You let the drivers assume a lot of the risk. And you want a valuation of a tech company, Well, there are a lot of other people that can figure that out, now, right. I mean if you the thing is, if you believe in the business, and you believe that that these companies create value, you still acknowledge the Uber is much bigger

than any of these other companies. It has a bigger network, it's it's a better known brand. Although Lift is competitive in certain cities, Uber is kind of the biggest, UH of these apps in most of the most of the cities where rides sharing companies play. At what point, though, Max, does this start to snowball where you have regulators targeting the business both because of some potential infractions as well as mounting opposition from taxi services that have been long standing. Well,

it is starting to snowball. I mean what we saw in London where where regulators in London who had kind of given Uber the okay, sort of we're reading this news that was happening in the US about this program gray Ball, which I mentioned earlier, and said hey, wait a minute, we're not okay with this, and they basically announced that they were taking Uber's license away. And now they've sort of reopened negotiations. They're trying to negotiate a

new deal with Uber. Uh. There's there there rumblings that the same thing could happen in Brazil. And I think it's important to remember and and Uber was very good at sort of playing local politics, like going from city to city figuring out how to get their service legal or basically pushing and forcing regulators hands to make it legal. But each of these cities have very specific local issues, and it's not like it's a done deal to any

any mayor anywhere around the world. If if, if he or she decides it's popular to go after Uber can do that, and there's not much Uber can do, and it's it could potentially, especially if criminal inquiries lawsuits continue, amount this won't go away. It's not like Uber is legal everywhere and it's gonna be legal everywhere forever. Just quickly, because I know this is slightly off topic, but you also have been writing a lot about Facebook and legal issues.

Have you noticed that the technology industry now faces the legal same legal issues that maybe the non tech world had faced, you know, decades earlier. Yeah. Absolutely, And I think there is an interesting sort of Facebook connection here. The the Uber chief security officer, Joe Sullivan, was at Facebook, and you wonder how common are these kind of internal

spy agencies. I mean, Uber had a lot of consumer data, but it is not the only company in Silicon Valley with of data that's ultra competitive that has been pushing in all sorts of ways, and I think we have to look at this and ask, you know, how common were these practices, you know, industry wide, And I don't think we know the answer yet. All right, well, we're gonna look to you for the answer. I think you got almost you know, at least a couple next stories

out of that one. Thanks very much for joining us. Max Chafkin is a columnist for a Bloomberg Business Week. A writer for a Bloomberg giving us some details about what's going on with Uber and those additional criminal investigations. Well, there is a one hundred and eight year old company that a lot of people in America have never heard of. It is now called Mo Mochi ice Cream, and the chief executive officer joins us now, Craig Burger. Thank you

so much for joining us. You became CEO about two months ago and had previously been uh, the CFO of the company. What excited you about the opportunity of leading this particular company. Yeah, I think the fact that we're innovation in the snacking category is everything I needed to hear and see. So the company has done a phenomenal job taking a very old item like mochi ice cream, and have really targeted the millennial consumer to bring it

to the masses. So we're really changing the snacking world one mochi ball at a time. All right, So can you tell us what exactly is a moochi? Many people may know it as a Japanese dessert. You're calling it a snack the form fact. I'm sorry I have to use this on my son tonight. I'm changing the world one mochi ball at a time. You know, when they start giving me flack about anything gone so well, they're going to give you a cooler of it later on,

of course. And I want to just tell people how it's made and and a little bit of the history of the company, because if you're from Los Angeles at all, you're very familiar with the heritage of this company. Yeah, let me start. So, the company is a hundred and eight years old, uh. And it was a confectionery to start so, dealing in primarily Japanese bakery items. And the founders invented basically mochi ice cream, which is a premium

ice cream surrounded by sweet rice stough uh. And that brand was under the Mikawaya name and it had primarily traditional Japanese flavors, So people who tried the product loved it,

but the awareness was very small. So then in two thousand sixteen, Century Park Capital private equity out of Los Angeles purchased the company, and they had this vision of taking a very ethnic snack and really taking it to the masses by creating a brand new brand, the Mimo Mochi ice Cream brand, and coming out with more traditional flavors that we know, like strawberry chocolate, cookies and cream, and really targeting the millennial consumer something that had never

happened before. You mean, rather than red bean paste or green tea mochi. Uh, they want to get more American. I'm wondering, where is the market for mochi ice cream. Is it simply in the big cities or is there greater acceptance of more quote unquote ethnic foods in other places outside of the city's okay, great question. Let me

start out with the market itself. So Mochi ice cream falls under the frozen novelty category, which is about a three billion dollar category, and that category has been flatted down slightly over the last couple of years. Mochi ice cream is part of that category. Mochi ice cream is the category within there that it has the most growth over the last year or two, primarily driven by Mymo

Mochi ice Cream. It's definitely a coastal brand. We started out in l A and really in the last seven months have blown up My Mo Mochi ice Cream nationwide. But in l A, San Francisco, Seattle, and now New York, we're really blowing it up. Craig, what's the biggest challenge for you to expand awareness of this brand? I mean, what have you been most surprised at with respect to the difficulty. Well, it's pretty interesting because most people you

talk to have never heard of Mochi ice cream. So the first thing you try and do is have them try it. So you know, We've hired a marketing team, We've got a strategy in place to really increase the trial and awareness of the product, and part of that is being done through what we call the Mochi Bar concept.

And we're really we're the first ice cream company to break away from the ice cream freezer in the retailers and go into the perimeter of the food stores with a self serve Mochi bar, and that's a paid sampling event because consumers are paying anywhere from a dollar fifty two dollars for Amachi ball and trying it on the spot. And it's usually the normal reaction. The first time they bite into it, it's wow, that's kind of weird, and then the second bite is, oh my god, I love

this stuff. So it's uh, it's a great thing to see, you know, it's something that is really uh, taking the stores by surprise and building overnight. Was it a conscious effort to turn it into a snack as opposed to a dessert and therefore the smaller form factor. Yes, so we see it as a snack. You know, millennials snack at least four times a day. Uh, this is a perfect product. And ten calories per hundred and ten calories. It's handheld, it's portable, it's grabbing go. It fits their lifestyle.

You know, we have fifteen or so flavors. What does it cost? Uh? You know, it comes by the ball. If you buy an e Moachi bar would be anywhere from all fifty to two dollars a ball in a six pack. The retail is about five or dollar a ball. I love how targeted millennials are. They like snacks, not desserts because deserts are too fattening, and they like it small and they like it quick. Who right there, you go, Well, you've definitely defined the market, and I think you're gonna

start eating some of these moments. I must say that we gotta leave it there. Thanks very much, Craig Burger. He is the chief executive of Momochi ice Cream. NAFTA North American Free Trade Agreement five hundred and twenty five billion dollars. That's a total amount of trade between the United States and Mexico. Mexico is the number three trading partner of the US, right after Canada, also a signatory to NAFTA. Here to tell us about the renegotiation of NAFTA.

There's our own White House correspondent. We've got Jennifer Jacobs joining us from Washington, d C. Jennifer, maybe just outline exactly what is scheduled to happen today, who's going to be there and what do they really aim to accomplish. Uh. First, it's Jennifer Epstein of on our White House team. Just wanted to make sure that's clear to that people aren't confused. Uh if they know our voices. Um so Uh. Prime Minister Trudeau is coming to the White House a little

bit later today to meet with President Trump. It's their fourth meeting since President Trump took office at the beginning of the year. Um. And and this is the same time that there are a whole bunch of uh you know that that that we're in this fourth round of trade negotiation talks. Uh, and that's happening here in d

C as well. Uh. You know, we're just anticipating in the US to continue to take a pretty hard line on some things that they that that they're kind of that the U. S officials kind of expect Mexico and Canada to be relucked into, including substantially raising the requirement of the requirements for rules of origin for vehicles. Um, you know what share has to be uh of the of the vehicle has to be built built in the United States. Jennifer and the rest of NAFTA. Jennifer, I'm

struck by President Trump versus Congress, versus his diplomats. Is President Trump carrying the weight of a unified group of politicians and policymakers as he renegotiates NAFTA or is he increasingly isolated in some of his demands? You know, I think this is a situation where in order that it's

increasingly isolated, I think it's been isolated all along. That that while there are certainly a big populist tervor uh to pull out of NAFTA, or that NAFTA the bad deal and it must be renegotiated, that there are so many Uh, there's so many US lawmakers who are who really would not do not actually support going all the way and getting out of NAFTA. You know, for this president, seems like threats are not just threats, but are It depends on what it is, of course, you know, if

we're talking about nukes, who knows. But uh, you know, threats on something like this are threats that he seems poised to follow through on, just the way he has initiated the process of pulling out of the Paris Climate Agreement. Uh, just as you know we are anticipating some kind of reversal from the um Iran deal. Uh. These are things where this president is willing to negotiate, was willing to

threaten uh in hopes of negotiating. Well, but what ends up happening is that he just ends up pulling out

all altogether and just given up on these things, Jennifer Epstein. Uh. And I also I apologize because of course I know you, and I just want to mention also that people can follow you on Twitter or your twit Twitter handle is at gen x j E N E P s. And as someone who is certainly covering historic presidency uh and has a background in history with your degree from a Princeton, can you just sort of step back for a moment and tell us what do you what kind of reactions

or what conversations do you have with other people, uh, and their reaction to this effort to renegotiate NAFTA, What did they tell you? How did they react? Well? Thanks, Pim, and don't don't worry about it. It's fine. It happens all the time in both ways with us. We get each other's emails all the time. UM. So I think that that in the context of this, this is pretty unusual.

You know, this is the president who seems to be, you know, at once attempting to fulfill some of its campaign problemises, which is something that presidents trying to do and oftentimes you know, get stopped up on either because once they get into office they realize, you know, just how untendable something is, or they just can't get the

support from Congress something like this. The President seems to be ignoring all of that and just trying to move ahead in his own way without uh and necessarily getting anybody else on board. Uh. And that just this kind of uh, you know, indicative of his style and his

desire to be a bull in the china shop. You know, I'm struck by the fact that the US Chamber of Commerce Chief executive Officer Thomas Donohue was speaking in Mexico City yesterday and said that he would fight quote like hell to defend NAFTA if Trump tries to pull out. I'm wondering what could be the fallout if President Trump

decides to single handedly pull out. Well, you know, it would obviously, uh, you know, turn the ire of a whole lot of members of Chamber of Commerce, of the Chamber of Commerce, which is you know, the hugest uh business lobby in the country. That all that that you would send only have a president who's still despite having dissolved his various councils uh seems to you know, rely on that kind of support and the and the support of the establishment mainline Republicans dwindling as they may be.

That if if they can't even rely on him to kind of support their business interests, uh, you know, why should they be supporting him at all? For Epstein, thank you so much for joining us. Jennifer Epstein covers the White House for us here at Bloomberg News and NAFTA. Talks are going on today in Washington between President Trump and the head of Canada. Thanks for listening to the

Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa abramowits one before the podcast. You can always catch us worldwide on Bloomberg Radio.