As if Uber's past decisions weren't causing enough problems, now the company reportedly faces an FBI and U.S. Attorney's office probe into how it used software to create fake Lyft accounts to track the rival's drivers.
Sometimes you can be too clever for your own good. Otherwise known as the deity of the markets has a wicked sense of humor.
The story, broken by the Wall Street Journal, reports that the Federal Bureau of Investigation and the Manhattan U.S. attorney's office are examining whether Uber's software committed unauthorized computer access, an aspect of the complex federal treatment of computer-related crimes So, don't expect an immediate clear answer as to whether Uber might be charged with something.
Federal officials don't comment about ongoing investigations and Uber has not yet responded to an emailed request for an interview or statement.
Uber beat back a lawsuit last month about the use of this so-called "Hell" program that was in use between 2014 and 2016. A Lyft driver had filed the complaint. But the judge, after dismissing the case, left open the possibility of filing an amended suit, the deadline for which arrives on September 14.
Even without criminal charges or this particular lawsuit, the report of a federal investigation is at the very least more bad PR at a time where Uber seems to run a side business in making itself look ugly. One of the results has been falling market share in the U.S., with Uber going from 91 percent to 74.3 percent, much of which Lyft has been happy to snag to hit a new high of 23.4 percent.
Uber's pain may be Lyft's gain, but opportunity is only available to those who are ready. Instead of trying to become a bigger bad boy, Lyft has focused on the business fundamentals, like expanding availability to 40 states and a corresponding 94 percent of the population. That combined with good marketing and partnerships goes a long way.
But, still, had Uber kept its nose clean, Lyft might not have grown as much.
You've got to wonder whether Uber's new CEO -- Dara Khosrowshahi, former chief executive of travel site Expedia -- hired in the wake of the forced resignation of co-founder Travis Kalanick, is asking who booked this particular trip for him and whether there was still time to change the itinerary.
The entire sector has some serious problems to solve, like how to make a profit when the cost of operations are so high. Platform companies like Lyft and Uber can't provide the economies of scale necessary to lower expenses for the entire ecosystem without endangering their treatment of drivers as independent contractors. And yet, Lyft has said that it continues on target to become profitable in 2018. That would be a major accomplishment.
Maybe Uber can stop growing a crop of problems and instead start becoming financially viable as well.