An Gia Doan Nguyen – DS150166

Analysis of the Uber crisis case in 2017 and its Impacts on stakeholders

I. Introduction

In this day an age, traveling has become a crucial part and parcel of life. In March 2009,

the climbing demand for moving from one place to another resulted in the inception of

Uber - a technology ride-hailing platform, founded by Garrett Camp, Oscar Salazar &

Travis Kalanick (StartupTalky, 2022). Basically, it is essential to note that prior to Uber’s

entry, there were no technological advancements in the market. Thus, the Uber industry

brought about greater digital innovation in the transportation sector, especially the

traditional taxi industry since its first decade in business (Schneider, 2017). In 2015, Uber

announced the reach of 1 billion rides globally, marking its major milestone

(Fortune.com, 2015). After 2 years, Uber was honored with the title "Most Well-funded

Start-up" and the most valuable private company in the world as well, by CB Insights

(Forbes, 2017). Unfortunately, 2017 seems like a string of random controversies and

awards for Uber. To be clearer, at the same time, Uber confronted a series of problems

such as unfair treatment of employees, theft of technology from the prominent investor

Google, employee resignations, and loss of customers due to the campaign to

#DeleteUber and Travis Kalanick, the founder of Uber was caught arguing with a driver.

All these problems gave the company a bad reputation and criticism for three months

(January to March) despite CEO Travis Kalanick's resignation after his official public

apology. Lastly, faced with a series of scandals in all fields, Uber's slow and indecisive

response led to a 2017 crisis of unprecedented scale, affecting Uber's tangible and

intangible corporate value. This article focuses on analyzing some of Uber's typical

An Gia Doan Nguyen – DS150166

scandals in 2017 and their impact on the entrepreneur's stakeholders and relationships. In

addition, this exercise will also report the strategies implemented by Uber to tackle the

problems, maintain relationships with stakeholders, recover the company's position, and

discover how Uber returns to the ride-hailing market.

II. Body

Investigation of the Uber Case

Once thought to be one of the most successful startups in Silicon Valley, Uber in 2017

was running into a series of troubles. The trouble started in January 2017 with the

political side, Uber recently faced a backlash when Mr. Kalanick agreed to join President

Trump’s economic advisory council. About 500.000 customers deleted their accounts

after Uber lifted surge pricing during a strike triggered prompted widespread outrage via

a viral #DeleteUber campaign on social media (The Guardian, 2017). Right after

#DeleteUber 1 month, Waymo, a subsidiary of Google, sued Uber for allegations of

stealing trade secrets in self-driving car technology (Wired.com, 2017). Moreover, a few

days after the Waymo lawsuit, they had to open an internal investigation because the

former employee, Susan Fowler, published on Twitter Blog exposing discrimination and

sexual harassment alleged harassment. Weeks later, Kalanick was criticized for a video of

him arguing with an Uber driver over falling fares. However, Uber's media crisis spiral is

not over yet. In March, the investigation by the New York Times reported that Uber had

kickstarted “Greyball” a software feature to evade law enforcement officials since 2014

in several regions (The New York Times, 2017). The widespread frustration among Uber

customers reach its peak in November, Uber knowingly conceal a massive data breach in

An Gia Doan Nguyen – DS150166

2016 by paying $100,000 to hackers to delete 57 million users’ personal data worldwide

(Reuters, 2023). And all the while, they kept losing senior personnel. Prominent are

Director Jeff Jones the reason for not being culturally appropriate for management and

Rachel Whetstone – head of policy and communication. 

Undoubtedly, Uber's crisis gives its competitors an edge. They emphasize safety, ethics,

and positive work environments, posing a challenge to Uber's market dominance. Despite

Uber's revenue continuing to develop, rival Lyft has been exploiting the difficulties of

Uber during its crisis stage. Uber's US market share fell from 82% in early 2017 to 70%

by Q4, coinciding with Lyft's 60% surge in users during the campaign #deleteUber

(Usatoday.com, 2017). Uber was fined $148 million for a data breach, the largest

settlement in the United States (The Washington Post, 2018). After the crisis, Uber faces

legal and regulatory challenges, damaging its reputation and finances. This has raised

questions about the possibility of an Uber IPO. Uber's value could plummet because of

recent reputational damages.  

Analyzing Uber’s stakeholder relationship management

The Uber 2017 Crisis has significantly impacted both Uber and its relationships with

various stakeholder groups. Firstly, shareholders and stockholders are the first groups

directly affected by this crisis. The company's reputation has been tarnished, with an

estimated market capitalization of more than $70 billion down to a valuation of around

$50 billion (Somerville, 2017). Moreover, the share price of Uber's private stock fell

about 15% to a mid-to-high $30 amid a flood of bad news (The Information, 2017). Uber

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shares that have not been IPO have been valued at 48.77 USD/share since the end of

2015. According to the Wall Street Journal, at the end of June 2017, 3 funds Vanguard

Group, Principal, and Hartford Funds priced Uber stock at $41.16 per share, valuing

shares down 15% (WSJ, 2017). After a year of scandal, Uber was forced to accept a

cheaper price in the deal. Uber shareholders on December 28, approved a 17.5% sale to a

group of investors, of which Softbank holds 15%, according to the Wall Street Journal.

After a series of crises, Uber’s market capitalization was at $48 billion, down 30 percent

from its June 2016 valuation of $68 billion, according to an Uber spokesperson

(Investing.com, 2017). The individual groups - Uber users, including Uber customers,

drivers, and employees - this is the group of stakeholders whose relationships were most

affected during this event. A series of assaults, rapes, and personal data leaks have

increased the insecurity of Uber users. Uber's response to the crisis is entirely

inappropriate, this destroys the level of customer trust that has decreased after Uber's

mass scandal, they turned to alternative solutions, leading to a shortage of market share

Uber. Current employees are also the group directly affected by the Uber crisis. They feel

depressed, trying to find a way out of this place, and want to prove that they are not toxic

factors in the organization.

How the firm tackles issues and their impacts

Uber's immediate public apology and swift actions to address the multi-faceted scandal

partly placated negative attention. In May 2018, the company announced that it would

take a series of actions to show its responsibility and decisiveness such as increasing

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driver screening, checking criminal background every year, or not issuing provisions to

prevent people from driving. In June 2017, Travis Kalanick, co-founder and former CEO,

resigned along with many apology letters to Uber users and employees. Appointing Dara

Khosrowshahi as the new CEO, Uber's Crisis Management Strategy Offers Lessons for

CEOs (chiefexecutive.net) transforms leadership, initiating comprehensive reforms in

corporate culture to promote an ethical work environment thought. Through mass media

channels, Uber has publicly acknowledged the challenges that need to be overcome and is

ready to take full responsibility for the affected parties. Uber's apology ad, new CEO

Dara Khosrowshahi speaks directly to the viewer showing straightforward expectations

of doing the right thing. Its response rate of 14% disapproves of Uber's apology, while

32% are undecided about whether to forgive Uber and 31% forgave Uber (Business

Insider, 2018). After multiple scandals and controversies, financial health is likely a good

measurement for Uber's brand. Ride-hailing company's full-year net loss widened to $4.5

billion in 2017 during its tumultuous year. For 2017 Uber’s booking rate was $45 billion,

which rose 136% from $19 billion in 2016. But then small increasing by 10% to just $50

billion in 2018. Those proportions say Uber’s slowing growth as its scale.

Although its revenue and narrowed losses increased, the deceleration of growth from

over 100% to 40% (2017 – 2018) is considerable. Negative publicity and reputational

damage have resulted in reduced user demand and sluggish Uber's revenue growth in the

recent years. While the company continues to issue statements regarding each incident,

it's hard to ignore the fact that mistakes continue to pile up. Uber's biggest failure in

dealing with the public interest is the lack of transparency. A series of crises in 2017 put

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Uber in the dilemma of a public company. 2 years after that crisis, Uber is valued at $55

billion, 40% less than its peak projected price before going public. 2019, as The

Washington Post, reported Uber's reputation hasn't changed much since #DeleteUber in

2017. Compared to the last crisis in August 2022 reported by (The Guardian, May 2022)

(More than 124,000 confidential documents leaked out, exposing attempts to aid Uber

political lobbying, texts reveal company used ‘kill switch’ during raids to stop police

from accessing the data and the case former Uber CEO told executives ‘Violence

guarantees success’), it shows that the effort to improve Uber's image after the crisis

contains many potential drawbacks on a company's ability to win back their market — no

matter how much they spend.

III. Conclusion

The series of Uber's trouble in 2017, suffered a litany of negative headlines that would

have arguably dinged — from corporate culture and work environment to certainty in

regulatory and legal enforcement, a lawsuit about patent, shedding executives and

employees continuously. It has caused great financial damage as well as the reputation of

Uber. Through this crisis, it can be seen that Uber almost failed to manage the crisis

successfully because it did not lay out the necessary framework to identify the type of

crisis it faced, allowing them to identify and then implement the appropriate strategies to

deal with the crisis. Furthermore, Uber does not have a backup plan, so even if they

consider the actual options available, they cannot implement them effectively because

they do not have the background or guidance in the form of a contingency plan for better

An Gia Doan Nguyen – DS150166

response. Facing successive crises in finance, corporate culture, and ethics .. Uber

completely fell into a passive position, which should have been handled with a proactive

and effective crisis management strategy. Today, Uber is still facing the most

fundamental shortcomings of its crisis management and management strategy. The

importance of this case is the lesson learned for every newborn tech company to not leave

out their crisis management behind in their business operation.

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An Gia Doan Nguyen – DS150166