Ride-sharing service Uber has a chip on its shoulder. It is a revolutionary company that upsets the status quo in the car-for-hire industry, but recently it's been in the news for all the wrong reasons.
Uber Senior Vice President of Business Emil Michael ignited the controversy by wanting to dig up dirt on journalists critical of the company and smear their reputations.
Other companies have experience PR nightmares and survived. But in order for Uber to do the same, leadership must adjust its combatitive culture, otherwise it runs the risk of losing support against the entrenched industry lobby.
How to alienate people in one easy step
BuzzFeed reported that Michael mused about spending "a million dollars" to hire opposition researchers and journalists to look into those critics' personal lives and families. Michael wanted to "give the media a taste of its own medicine." But now it's Uber that is eating crow.
Once the comments became public, Michael quickly walked them back and apologized. Yet other revelations about Uber indicate there is a companywide culture that is overly sensitive to criticism. Doing "oppo research" on industry adversaries and "weaponizing the facts" isn't an endearing quality.
Lawyers kept on speed dial
It's difficult to be publicly called out for your failings. Customers who post negative reviews of local businesses on Yelp (NYSE:YELP) or Angie's List (NASDAQ:ANGI) are increasingly finding themselves on the receiving end of lawsuits demanding the reviews be taken down. But it's the companies get the black eye in such cases.
General Mills (NYSE:GIS) created a PR disaster when it attempted to limit a customers' ability to sue if they previously "liked" its products on social media. The tsunami of negative publicity following its disclosure caused General Mills to quickly eliminate the policy.
Sales were probably not hurt by the kerfuffle, but others haven't been so lucky. Mediabridge Products almost bankrupted itself by threatening to sue a customer who left a bad review on Amazon.com (NASDAQ:AMZN). That generated even more negative reviews of its products and caused Amazon to ban the company from its site -- Mediabridge's primary outlet for selling its products (Amazon seems to have since reinstated the company's store).
Loose lips sink ships ... and careers
Executives with loose lips have long created headaches for companies.
- Abercrombie & Fitch's (NYSE:ANF) CEO alienated large groups of potential customers by disparaging those he deemed to be not "cool."
- lululemon athletica’s (NASDAQ:LULU) chairman caused an uproar after he said it was women’s bodies that were the problem, that "they don’t work" with the clothes, not that the clothes themselves were an issue, which women found offensive.
- The CEO of tire maker Titan International (NYSE:TWI) nearly created an international incident by insulting French workers to the country's labor minister.
- And Microsoft's (NASDAQ:MSFT) CEO caused a hubbub when he suggested women meekly wait for raises to be given and not ask for them.
Uber simply forgot the old political adage, "Never pick a fight with someone who buys ink by the barrel." You don't argue with the media because they can go after you all day long. That's doubly true in the Internet age, where bytes are far more plentiful than ink.
But the mindset at Uber runs deep. Earlier this year, it hired President Barack Obama's former campaign manager, David Plouffe, who raised the craft of opposition research to an art form. Uber's willingness to "weaponize" research against the taxi industry shows it has a win-at-any-cost attitude.
Will there be blowback?
The question is, will this hurt Uber's business?
There is validity to some of the criticism leveled at Uber. As TechCrunch pointed out:
- It used dubious means to poach drivers from competing services;
- It questionably used customer data to tout its service; and
- It speculated Uber users were using ride-sharing for late-night trysts, or as Uber calls them, Rides of Glory (Uber took down the blog post, but it's preserved in the Internet archives).
Uber doesn't want to learn these incidents. Instead it wants to go on the offensive and attack those who bring them to light.
Take a lesson from social media?
Facebook (NASDAQ:FB) seems to routinely violate its users' expectations of privacy, but doesn't vilify and smear those who broadcast the attempts. It largely corrects the problem, and the social media giant remains as popular as ever.
Many of Uber's practices similarly run counter to privacy expectations, but this current public relations debacles don't have to be fatal -- that is ultimately determined by how the company handles the situation.
Right now, Uber keeps shooting itself in the foot. But instead of shooting off its mouth again, Uber should realize that words have consequences. Uber could say it best by simply saying nothing at all.
Rich Duprey owns shares of Abercrombie & Fitch Co.. The Motley Fool recommends Amazon.com, Facebook, Lululemon Athletica, and Yelp. The Motley Fool owns shares of Amazon.com, Facebook, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.