Uber CEO and Pittsburgh Mayor Discussed Reducing State Fines, Emails Reveal

On May 3, Pittsburgh Mayor Bill Peduto wrote a letter to the state of Pennsylvania's Public Utility Commission, which had recently levied an $11.4 million fine against Uber for operating in the state without permission.

The letter, which is also signed by Pennsylvania Governor Tom Wolf and Allegheny County Executive Rich Fitzgerald, is an impassioned plea for leniency. It defends Uber in strong terms and notes that Pittsburgh's position as Uber's self driving car testbed could be at risk if "state regulators continue displaying such hostility."

Uber "is investing hundreds of millions of dollars in the Commonwealth of Pennsylvania and is poised to invest millions more. However, all this could be lost if we send the message that Pennsylvania is not a welcoming place for 21st century businesses and other job-creators looking to make our state a home," the letter begins.

The letter was written at the behest of Uber, according to emails obtained by Motherboard using the Pennsylvania Right to Know Act. The emails give unique insight into the behind-the-scenes machinations of Uber's lobbying arm, which has been accused of steamrolling the regulatory processes of municipalities around the world. Though much has been written about Uber's increasing political power, there has rarely been a chance to see how its lobbying processes work. The emails show how the company's lobbyists and top executives deputize elected officials in an attempt to help it sidestep regulations.

Peduto had one-on-one conversations with Kalanick about the letter and also had a conference call about the letter with one of Uber's top lobbyists a week before publishing it. Other emails obtained by Motherboard show Uber asking county executive Fitzgerald to write a letter in support of the company.

Emails about the Public Utility Commission (PUC) situation and other emails between Kalanick and Peduto show a close relationship between the CEO of a company valued at $66 billion and Peduto, an elected public servant. Just an hour after the PUC decided to uphold the fine, he alerted Kalanick: "Bad news out of Harrisburg….," Peduto wrote in an email. On Peduto's "Uberversary," in June, he forwarded Uber's automated letter about his trip history to Kalanick: "218 miles. Any other mayors come close?" he wrote.

"The mayor seems to be a genuine enthusiast of the technology, which is fine, but it's enthusiasm for a very specific version of progress this company represents. I wonder if that clouds his and other policy makers' decisions," Rick Claypool, research director at Public Citizen and author of a report about how Uber has played politics nationwide, told me. "The emails suggest Peduto is patient zero here, with him kind of carrying water for the company and enlisting other politicians."

How Uber's Lobbying Works

In late November 2015, the Pennsylvania Public Utilities Commission proposed a $50 million fine against Uber for operating illegally in the state. By February, the company had begun officially asking elected officials for letters defending itself against the fine. In April, the fine was set at $11.4 million, which is a record for the PUC and much more than the $250,000 settlement Lyft accepted.

On February 23, Nicholas Zabriskie, a senior lobbyist for Uber who worked on the PUC fine, sent an email to Peduto's staff titled "Draft."

"Some suggestions for your consideration to publish on your site as a press release," Zabriskie said. Attachments to the email were not sent to Motherboard by the City of Pittsburgh in response to my records request, but Uber confirmed that it did discuss talking points with Peduto and his staff.

"We're proud to have our self-driving research hub in Pittsburgh, which has been welcoming and supportive of innovation," an Uber spokesperson told me. "We're always in conversation with mayors, state officials and others about Uber and the future of transportation—and it should come as no surprise that after the state PUC levied the highest fine of all time, we asked for their support."

In early April, Uber contacted other elected officials in Pennsylvania for support. Emails obtained by Motherboard show that Uber Pittsburgh's General Manager Jennifer Krusius asked Allegheny County Executive Rich Fitzgerald in more specific terms for a letter of support:

At the time, Fitzgerald said he was not comfortable with the request:

In April, Uber was back to working on Peduto, who had not yet issued a press release or letter in support of the company. This time, Kalanick got involved, asking "who should I connect my press/policy team to?"

"I will need to talk with you first," Peduto wrote to Kalanick. "I want to make sure you and I are on the same page, before our communication people put together the statement. Let me know a good time to call you Monday."

Monday April 25, Kalanick followed up with Peduto and put him in touch with Justin Kintz, Uber's head of US Public Affairs: "He can handle the details, but I'm here for whatever you need," Kalanick wrote.

Kintz and Peduto organized a conference call to discuss the contents of the letter.

"Travis and I just caught up on your conversations, and I have some ideas on how we might forward," Kintz wrote.

"I have a Wednesday AM call with Governor. He wants to talk again, before putting out statement," Peduto responded. "I will need the stats and figures Travis shared with me on the Lyft settlement and Uber fine."

On May 3, the letter was made public and Peduto immediately told Kalanick about it. "Did you see our letter? B." Peduto continued to keep Kalanick informed about the situation, forwarding him a report that the state was considering lowering the fine, and emailing him with the "bad news" immediately after the state upheld the fine.

Each of the three politicians who signed the letter vehemently defended Uber in statements to Motherboard.

"We worked very closely with Uber during the entire PUC process, from the very inception when the PUC filed its initial action, to the issuance of a letter to support reversal of the PUC decision and excessive fine," Pittsburgh's communications manager Timothy McNulty told me. "Throughout the entire PUC process, we collaborated with their lawyers, executives and staff. Cities like Pittsburgh should promote and not stand in the way of innovation."

"The governor will continue to advocate for innovative companies like Uber," a spokesperson for Governor Wolf told me.

Fitzgerald, who initially showed resistance to writing a letter, eventually relented after the PUC made its initial determination: "He has been a proponent of shared ride services and of Uber's research and development work for quite some time and will continue to be," a spokesperson told me.

How Uber play politics nationwide

Academics who research Uber say such cooperation is the cost of doing business with the company, which has an "experiment first and worry about consequences later" mentality. It ignores regulations and uses popular public sentiment and the promise of being involved with an innovative company to get politicians on a local level to bend to its will. At the first sign of pushback or regulation, the company will threaten to pull out of a city, as it did in Austin, Texas earlier this year.

"Uber is a company that placed a very big bet on expanding aggressively within the US and abroad," Sinziana Dorobantu, an assistant professor at New York University's Stern School of Business who is researching opposition to Uber worldwide, told me. "They never took the time to think about regulation very deeply, and there was a lot of backlash against them. Because of the backlash they realize they have to get into the game of lobbying themselves."

If politicians who want normal Uber service in their towns have to acquiesce to the company's way of doing business, cities who want more than that have to go a step further. The city of Altamonte Springs, Florida—which is running an Uber public transportation pilot program—has subsidized Uber rides for its citizens and has given the company wide latitude to determine what sorts of documents can be released in public information requests like the one I filed with Pittsburgh.

"Pittsburgh has long been a home to innovation in technology, and specifically autonomous vehicle technology—Carnegie Mellon has been pioneering it for two decades with the support of city government," McNulty told me. "In that spirit the city has pushed state government to adopt reasonable regulations for ride-sharing companies that ensure safety for passengers and drivers without creating undue obstacles for the growth of the services. It has taken the same approach with Uber's autonomous vehicle testing."

Uber's history of remaining only in cities that are friendly to its cause and the wording of the PUC letter—which raises concerns that Uber will leave if punished for breaking Pennsylvania law—make clear that Pittsburgh has pulled out all the stops for Uber and its self-driving car program.

"If they're active and present in your city and if they're investing in your city, then yeah, they will absolutely ask politicians to go to bat for them," Claypool said.

Claypool said that in effect, Uber has turned the politicians of Pennsylvania into its own lobbying force.

"Normally, you have companies hiring former public officials to then go and lobby on behalf of the company. Here, you see Uber doing that in a way that is above and beyond what you see in many instances," he said. "It's activating public officials who are sitting in their public service role as advocates for the company. Their investment within the city is the one side of the quid pro quo."

The emails show a mayor and staff that is happy to celebrate the company's successes as its own, as the company becomes more tightly integrated with the government itself.

As Uber was planning to actually put its driverless cars on the road, it became clear the company has more or less been calling the shots. In response to an email about when the driverless cars would actually start running, a member of Peduto's staff responded: "We've received very little information on Uber's plans for the week."

While there are many emails that show the city working closely with Uber on things like Pittsburgh's application for US government grants, an UberPuppies photo op, journalist access to the mayor on a ridealong, and politician attendance at off-the-record lobbying events, there are no emails or discussion about the driverless cars' potential impacts on traffic, rider, and pedestrian safety.

The emails and Peduto's public comments suggest that in Pittsburgh, Uber has found a place where it can do whatever it wants.

"For better or worse, the mayor made this Faustian bargain with a multibillion dollar company that's using citizens as guinea pigs in its driverless car experiment," Claypool said.

As Uber continues to expand and become ever increasingly indistinguishable from local infrastructure and public transportation, cities, states, and regulators will have to decide how much autonomy they're willing to give a private corporation. Because right now, those conversations are happening in email chains, conference calls, and secret meetings in major cities around the world.

"We're a local business in 450 cities around the world," Uber told me. "So we're always in touch with officials and other groups on the ground to both learn and educate on issues relating to Uber, ridesharing and transportation more broadly."

Correction: An earlier version of this article misidentified Jennifer Krusius's official position with Uber.