In nine months as CEO of Uber, Dara Khosrowshahi has proven adept at positioning the company to benefit from the public’s unease with Silicon Valley. After a challenging year for Uber, in which reporters covered every errant executive departure and corporate misstep, Khosrowshahi responded by thanking the press for their role in helping clean up the company’s culture. In Davos last January, when conversation turned to whether the tech industry should be regulated during a panel at the World Economic Forum, Khosrowshahi seized the moment to say he thought some regulation was good.
Now, Uber has announced that it will drop forced arbitration agreements, in which employeers, riders, and drivers are required to resolve disputes before a private arbiter rather than through the open courts, for claims of sexual harassment and assault. Alongside this policy change, the company is responding to requests from customers and former employees with myriad efforts to be more transparent about customer safety. In the first paragraph of the blog post announcing the changes, chief legal officer Tony West quoted Khosrowshahi: “We do the right thing, period.”
Uber’s actions might seem bold, but in reality they are a savvy way for Khosrowshahi to anticipate the inevitable. Regulation is coming to the large tech companies in Silicon Valley. With public pressure mounting for those companies to drop policies like forced arbitration, it’s likely that in the future, many of Uber’s peers will be forced into this shift. But by acting before these changes are required, and implemented by competitors, Uber curries favor with customers, regulators, drivers, and employees. It’s a strategic way for Khosrowshahi to restore trust to the company’s sullied brand and go a step further, advancing the perception that Uber is a leader among tech companies in creating policies that are good for people over profit. Indeed, hours after Uber’s announcement, Lyft also removed mandatory sexual assault arbitration.
It’s impossible to overestimate how critical this redemption narrative will be to Uber’s future success. Khosrowshahi has said he aims to take Uber public next year. In the United States, the company’s largest base, Uber is, at worst, still marked as unethical by the misdeeds of its early leadership team, and, at best, a commodity. Increasingly, both riders and drivers have a lot of choices among ridesharing services. Jump into an Uber in New York City where I live, for example, and the driver is likely to be monitoring Lyft and Juno as well, engaging in constant mental math to figure out how to make the most money. Riders, meanwhile, check a series of apps to see what’s cheapest.
As analyst Ben Thompson writes in his daily newsletter, Stratechery, “Uber’s position is very difficult to defend.” It may offer the largest network of drivers for now, but both drivers and customers are free to come and go. Other companies can catch up and surpass the service.
To succeed, Uber will need to be a customer’s first choice, every time, period. And customers won’t choose Uber if they don’t believe it’s safe. In April, 14 women who accused Uber drivers of sexually assaulting them wrote a letter to the company’s board asking that the arbitration agreement be waived so that they could sue Uber in open court. Separately, a CNN investigation published April 30 found at least 103 drivers had been accused of sexually assaulting or abusing passengers in the past four years.
Today’s announcements, delivered in a blog post entitled “Turning the lights on,” are intended to shore up customer safety while advancing the perception that the company is capable of setting the gold standard in rideshare safety. The changes are straightforward: as mentioned, the company will no long require Uber riders, drivers or employees to arbitrate individual claims of sexual harassment or assault. Uber will also give victims the option to settle their claims with Uber without a confidentiality requirement that covers the facts of their experience. Finally, Uber has promised to publish a safety transparency report that will include data on sexual assaults and other incidents that occur on the Uber platform. In fact, the company plans to take this one step further, by collaborating with experts and then outsourcing its methodology so others in the travel and transportation industry can use it.
West notes these changes are extensions of a larger effort the company has made since Khosrowshahi has arrived to make rides safer. Uber says it has also strengthened driver screenings and invested in new technology to detect when a driver is involved in criminal activity. And it has added a feature that lets riders share live trip information with up to five people, so you can ensure, for example, that your wife knows you are on your way home. Last, Uber says it plans to roll out a new emergency button in the app so riders can automatically send a car’s location to a 911 center.
As West lays out this blanket of impressive initiatives, he also suggests that Uber is not really to blame for the large intractable social problem that is rape and sexual assault. He takes responsibility for the incidents while skillfully positioning Uber as part of a solution to a larger societal problem, rather than a problem in and of itself. The last 18 months, West writes “have exposed a silent epidemic of sexual assault and harassment that haunts every industry and every community,” linking to a New York Times story about how the Harvey Weinstein scandal has “unleashed a tsunami” of people speaking up about sexual harassment. The message is clear: this is not so much Uber’s problem as society’s problem.
And in promising to publish a safety transparency report, Uber flags that it will make its methodology public so that other companies in the travel and transportation industries can use it. This is a not-so-subtle way of reminding any reader that this is an industry issue, not an Uber issue. If it works, and other companies adopt Uber’s methodology, Uber sets the safety standard for the industry—a role that’s great for the brand.
In reality, that report likely won’t arrive for a long time. While West’s post doesn’t make clear the timing, West told the New York Times it first had to complete a system for reporting incidents, which it hoped would be in place by the end of the year.
But by stepping out early on the issue of forced arbitration, Uber has picked up goodwill, which will take effect immediately. It may do as much for the ride-sharing company’s good name as the 60-second ad campaign Uber released yesterday. It’s all part of Khosrowshahi’s not-so-secret plan to convince the world that Uber is a brand worth believing in.