Is Uber in trouble? | CNBC Explains

Following the resignation of CEO Travis Kalanick, CNBC’s Tom Chitty looks at whether Uber’s various scandals and ongoing criminal investigations could put the technology company’s future in doubt.

-----

Subscribe to CNBC International: http://bit.ly/1eiWsDq

Like our Facebook page
https://www.facebook.com/cnbcinternational

Follow us on Instagram
@cnbcinternational

Follow us on Twitter
https://twitter.com/CNBCi

Subscribe to our WeChat broadcast
CNBC_international

Uber, the ride-hailing app, was valued
between 60 and 70 billion dollars

at the beginning
of 2017

with CEO Travis Kalanick's position
at the firm seemingly secure.

Now after reports
of sexual harassment

and unethical business
practice inside Uber,

Kalanick is out
and 10 billion dollars

has been wiped off the value
of the privately owned company.

But as start-ups go, Uber is still
arguably the most successful of all time.

Before 2011, if you wanted a cab,
you did it the old way.

Now for 50 million Uber users
in 450 cities around the world,

taxi transportation is determined
by GPS and automated payments,

all linked through
smartphones.

So, as the users increased,
so did investors.

Jay Z and Jeff Bezos were just
two of the notable backers

who poured
money into Uber,

helping it grow and further
disrupt the taxi industry.

It wasn't all smooth
sailing through.

Uber's expensive push into China
came to an abrupt end in 2016,

when its domestic rival Didi Chuxing
announced it had acquired Uber China.

And more recently,
Uber merged with Yandex,

marking its exit from another
major international market, Russia.

Governments, drivers
and passengers launched

a seemingly endless
stream of lawsuits,

and taxi firms organized protests
in Europe and South America

as they recognized
their businesses were under threat.

Uber's legal and ethical conduct
was put under further scrutiny

when their drivers argued
they were being exploited

as part of the sharing
economy.

Despite this, Uber continued to
transform itself from a black-car service

into an extensive logistics company driving
towards a future of autonomous vehicles.

2017 however, has put the brakes
on Uber's and Kalanick's rise.

Real trouble began in January,
when an online campaign,

protesting the company's
connection to President Trump,

lost them 200,000 customers
in just one weekend.

Uber's reputation took
a bigger hit a month later

when it was forced
to launch an investigation

into sexual
harassment

and gender bias
within the company.

215 complaints
were registered

by the beginning
of June

and 20 employees
were fired as a result.

But that investigation,
at least, was internal.

Waymo, a rival in
autonomous car development,

is suing Uber for
intellectual property theft.

At the same time, the company
faces a criminal investigation

into its use of
the tool “Greyball,”

which was reportedly used to evade
authorities and city regulations.

By June, 12 high-level Uber
execs had left the company.

For Kalanick, viral dashcam
footage of a heated dispute

with a company driver and
the leak of his now-infamous

‘Miami Letter' in which he issued
sex guidelines to employees

attending a company
party in 2013

resulted in him taking
a temporary leave of absence.

But seven days later that temporary
leave turned into a permanent resignation.

So what was
the final straw?

Another lawsuit.

It was filed on behalf
of a woman in India

who was sexually assaulted
by her Uber driver.

Despite
the guilty verdict,

Kalanick and his team allegedly dug
into her private medical records

in an effort
to discredit her.

This was the final
nail in the coffin.

Days later, five powerful
Silicon Valley investors

penned a letter demanding
Kalanick's resignation.

Uber now has a number of
high-ranking positions it needs to fill.

In addition to a new CEO,
it also needs a Chief Operating Officer,

General Counsel, Senior Vice President
of Engineering,

Chief Marketing Officer
and board Chair.

And Uber needs
to act quickly too.

In the first financial quarter this year
the company lost 700 million dollars.

The polarizing figure of Kalanick now
joins a select group of former CEOs,

including Steve Jobs and Jack Dorsey,
who founded their own companies

to then be
unceremoniously ousted.

But Kalanick will remain on the Uber
board of directors and still has veto power.

Many believe that as long as he has
one hand on the steering wheel,

a return to the driver's
seat is still possible.