Uber at crossroads, facing lawsuit, mounting criticism and growing rivals

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Uber launching Toronto branch of self-driving car research group

Uber was born with brass knuckles. To survive, the ride-hailing company has had to fight taxi unions and entire governments. That brawling culture turned it into a global brand worth as much as $69 billion US. But the company has spent most of 2017 punching itself in the face.

First, a former employee made allegations of widespread sexual harassment and abusive behaviour at Uber's head office.

Then about 200,000 people deleted the Uber app from their phones, the New York Times reported, after Uber CEO Travis Kalanick agreed to participate in President Donald Trump's economic advisory council and was accused of trying to profit from a New York taxi strike protesting Trump's travel ban.

Recently, Kalanick was caught on camera yelling at an Uber driver who said he'd lost money working for the company.

The head of Uber's driver experience, Nundu Janakiram, says Kalanick apologized for his outburst.

"Travis said in his note that it was completely unacceptable the way that he acted to that driver," Janakiram said at Uber headquarters in San Francisco.

As for the alleged culture of sexual harassment, he said Kalanick will make sure everyone at the company is treated with respect.

"There's an investigation that's happening internally that will hopefully lead to some change within the company."

Then it was revealed Uber had designed an elaborate tool called Greyball to identify regulators and funnel them onto a fake version of the app which displays ghost cars that would never actually show up. On Wednesday, the company announced it would end that program.

Even one of Uber's most promising "good news" stories has gone sour.

During the testing of Uber's much-touted self-driving vehicles, the cars ran six red lights. And despite repeated demands from California's Department of Motor Vehicles, Uber refused to apply for a $150 permit to test them in the state. Uber's head of product, Matt Sweeney, said the company will now comply.

"We're in constant communication with the DMV and with other regulatory agencies make sure we're doing what needs to be done," Sweeney said.

Sweeney points to an array of sensors mounted on a massive truck parked on a San Francisco pier. It's a showpiece for Uber's self-driving truck company called Otto.

"We use these different sensor models together to build as robust of a view of the world around the truck as we can," he says. "On the top there, in the center, that's lidar, a scanning laser range finder."

But that laser is at the heart of what could be a very expensive controversy, one that an analyst says could even take down the company.

Google alleges Otto's co-founder downloaded 14,000 confidential files before he left Google's own self-driving truck company. Google claims he then started Otto based on their technology.

Otto was bought by Uber, and now Google is suing.

Uber denies the allegations, but Silicon Valley analyst Brian Solis of the Altimeter Group believes the lawsuit could be an existential threat to the company.

"That represents a very significant challenge for Uber and could end up either killing the company or resulting in the type of payout that would significantly impact Uber's profits over time," Solis said.

With criticism mounting, Kalanick announced March 7 that he'll hire someone to help him run the company. But Fabian Geyrhalter, who heads Finien, a branding agency for tech startups, thinks the loyalty of many customers and drivers may already have been lost.

"They forgot about the one thing that matters the most for any brand, which is people," Geyrhalter said.

And Uber is now facing more competition, not just from rival Lyft but from smaller companies who market themselves as the "Uber for" other things, says industry watcher Harry Campbell, who writes a blog called The Rideshare Guy.

"In the past year, we've seen really a huge emergence in a lot of the more niche services. So whether it's 'Uber for kids' or 'Uber for seniors' or 'Uber for airport rides,' there are a whole host of companies that are basically raising money and trying to focus on these niches."

And with this series of public relations disasters, analysts say other companies may be poised to profit from Uber's misfortunes.

"Uber's brand is at a crossroads," Solis says. "I think it's inevitable that it's going to have a negative impact on its revenues."

Geyrhalter agrees.

"There's not so much brand loyalty at this point yet because it's such a young company," he says. "At this point it's very hard to make that shift and still come across as an authentic cool app that people want to use."

He says other companies have been quick to market themselves as a more ethical alternative to Uber.

"Now there are ridesharing companies coming out that actually care about other things besides being being a ridesharing company," he says.

He says the lesson for hyper-aggressive Silicon Valley is this: If you lose sight of what made you cool in the first place, you may not be cool for long.

"That's really what will disrupt a company that used to disrupt a whole category."