Author Topic: The Inside Story of How Uber Got Into Business With the Saudi Arabian Government  (Read 146 times)

YELLO

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Even as Uber’s lawyers finalized the details of the deal, they still couldn't quite believe it would really happen. The Saudi Arabian government was set to give the San Francisco-based startup $3.5 billion, an astronomical amount. The company’s legal team had to double-check that it was even possible to send that much money in a single wire transfer. But on June 1, 2016, the Saudi Public Investment Fund sent Uber Technologies Inc. the cash in one lump sum. It was the largest single investment from a foreign government to a venture-backed startup ever—and still is.

The sprawling consequences of that mega-deal have yet to fully unfold. Two years ago, the money helped Uber settle its war with Didi Chuxing in China, fortified its position against rival Lyft Inc. and empowered then Chief Executive Officer Travis Kalanick ahead of a long, pitched battle with investors who ultimately pushed him out. Now, the deal is drawing Uber into a global reckoning over the business world's relationship with Saudi Arabia.

Bloomberg has learned that through direct and indirect holdings, the Saudi government owns more than 10 percent of the ride-hailing company. Its board also includes Saudi official Yasir Othman Al-Rumayyan, the managing director of the kingdom’s sovereign wealth fund, and an ally of Saudi Crown Prince Mohammed bin Salman, the fund’s chairman. As the fallout from the murder of Washington Post columnist Jamal Khashoggi at the hands of Saudi agents roils Silicon Valley, there is arguably no company more deeply intertwined with Saudi Arabia than Uber.

What follows is the strange story of the massive deal that has already shaped one of the world’s most valuable startups, and whose effects will ripple well into the future. It spans Uber’s operation to spy on a Chinese rival, an international bribery investigation, and the starkly different positions of Khosrowshahi and Kalanick in the face of a simmering geopolitical crisis. This account is based on more than half a dozen current or former employees and investors, all of whom spoke on condition of anonymity in order to protect their relationship with Uber.

The financial opportunity in Saudi Arabia first appeared on Kalanick’s radar in 2016. That spring, then Uber executive David Plouffe, Barack Obama’s former campaign manager, was making a three-city tour to Cairo, Dubai and Riyadh. Uber was already operating in Saudi Arabia, where it pitched its service as a safe way for women to get around in a country where they were not allowed to drive. In Riyadh, Plouffe met with top Saudi officials, including Public Investment Fund manager Al-Rumayyan. In those talks, Plouffe learned more about the Saudi government’s plan to diversify its investments and reduce its dependence on its vast oil industry, said two people familiar with the discussions. The Public Investment Fund declined to comment for this story.

When it came time to announce the deal, there was some trepidation inside Uber's policy and communications team about taking Saudi money. The primary objection centered around gender discrimination in the country, and in particular, the ban on women driving. In an effort to build goodwill that May, Uber’s policy team added Princess Reema bint Bandar Al Saud, a member of the royal family and a vocal women’s rights advocate in the region, to its global policy advisory board. She was a public supporter of the investment and advised the company in exchange for Uber shares.

When he took over, Khosrowshahi set to work trying to salve Uber’s many scandals, and there was little indication that its ties to Saudi Arabia would ever become one of them. By 2018, things were going so well that Uber effectively re-upped its relationship with the country by raising $9.3 billion in funding in a deal led by SoftBank Group Corp. The enormous check was a coup for Khosrowshahi as Uber’s new CEO. And behind the scenes were the Saudis, who provided $45 billion in funding for the $93 billion SoftBank Vision Fund. While the investment is currently on SoftBank’s corporate books, like many of its investments not made directly through the Vision Fund, this one is also expected to transfer over to the fund after government approvals.

As recently as this summer, when Saudi Arabia lifted its prohibition on female drivers, Uber’s relationship with the kingdom appeared trouble-free. American conventional wisdom saw Prince Mohammed as a liberalizing force, despite the anti-bad business purge in 2017 that was viewed as a bid to concentrate power. The relationship had been so productive that Uber was considering doubling-down in the region with an acquisition of Dubai-based ride-hailing company Careem. (Today, Uber is still considering making the acquisition, one person said.)
Then, in October, journalist Jamal Khashoggi was killed in a Saudi consulate in Istanbul, trying to pick up his marriage papers. Allegations started piling up that Prince Mohammed was involved in orchestrating the killing. Within days, the event became a full-blown public relations disaster for Saudi Arabia and its U.S. business partners, after nothing else seemed to stick. “This is a real turning point,” said Code Pink’s Medea. “So much has changed in one month.”

One man, however, did not publicly distance himself from the Saudis. Kalanick was spotted in Riyadh the week of the conference. And unlike other leaders including Y Combinator’s Sam Altman and former U.S. energy secretary Ernest Moniz, he has not announced that he’s withdrawing as an adviser to Neom, the Saudi mega-city project. Kalanick’s links to the country stretch back before Al-Rumayyan proved a faithful ally during his fight with the board, to 2016, when he met with Prince Mohammed at San Francisco’s Fairmont Hotel.

Executives involved in cutting the deal with Saudi Arabia said there isn’t much that Khosrowshahi can do to extricate Uber from its deep ties to the kingdom. The best hope for resolving Uber’s Saudi stigma, insiders said, is for the company to go public, giving it more latitude to reshape its board. Public companies have little control over their investors, potentially absolving Uber of some of the blame for an autocratic bedfellow.

So far, Uber’s strategy appears to be waiting out the public backlash. The company’s board met Tuesday in a marathon meeting attended by the entire board, including Kalanick and Al-Rumayyan. Khosrowshahi was scheduled to present his plan for 2019 as Uber prepares for a public offering. And Al-Rumayyan’s status as a director, the company said, is unchanged. At least for now, Khosrowshahi seems willing to ignore the Saudi in the room.
https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.bloomberg.com/amp/news/articles/2018-11-03/the-inside-story-of-how-uber-got-into-business-with-the-saudi-arabian-government&ved=0ahUKEwi1yO_ksbjeAhUI3FMKHcP2AQAQyM8BCEcwBw&usg=AOvVaw2JofWwVb7ATCmElOrfpRhE&ampcf=1

YELLO

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As stated in the article:

One man, however, did not publicly distance himself from the Saudis. Kalanick was spotted in Riyadh the week of the conference.

Reminder: Travis Kalanick, the ousted CEO and co-founder  still has a seat on Uber's board of directors.


YELLO

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Uber is in business with Saudi Arabia so that means that the TLC is in business with Saudi Arabia too.
« Last Edit: November 03, 2018, 02:14:55 PM by YELLO »

nyctaxinews

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And what does all of this mean from our point of view? Is this good? Is this bad? All I want is to see UBER go bankrupt and disappear. They stole my future and I want it back!

YELLO

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The fleet owners should run an aggressive campaign against Uber and the $2.50 per trip MTA rip-off.




Antieuba

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Interesting that this report was put out by Bloomberg who has money in Andreeson Horowitz who has money in Lyft.

Is this the beginning of Lyft positioning itself as the alternative to Uber.

Will they be there to pick up the customer and driver base when Uber blows up?

YELLO

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Antieuba, you read my minnd!

Nyctaxinews, yes, you should care. In my opinion we need to gather as much information about the enemy/enemies as possible.

nyctaxinews

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I do care. I just want to know in simple language how this information will help bring Uber down?
« Last Edit: November 04, 2018, 11:28:35 AM by nyctaxinews »

YELLO

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I'm well aware that this does not help you today but maybe if we continue to uncover information daily, maybe we'll find the smoking gun or the cumulative pieces will add up and mean something soon. The alternative is that we can sit on our hands and do nothing.

Uber has quite a propaganda machine, certainly something we can learn from. It's time we get our own machine.

nyctaxinews

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Uber is a corporation with one man sitting on top of the pyramid . We are not like this. We are fragmented and have many voices. That is our weakness that UBER is taking advantage of. So, how do we change that?
« Last Edit: November 05, 2018, 05:15:49 AM by nyctaxinews »

YELLO

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