Uber shareholders will vote Monday on a proposal that, if approved, will compel the company to fully disclose its “direct and indirect lobbying activities and expenditures.”
Advocates of the proposal argue that such information is critical to understanding the sustainability of Uber’s business model.
“How much do you have to lobby to grow your markets or defend your markets? Because that goes to the resilience of how you’re earning money,” Michael Pryce-Jones, senior government analyst at the International Brotherhood of Teamsters, the labor union that wrote the proposal, told TechCrunch.
Last year, the Teamsters submitted the same proposal for the first time. It failed, with only 30% of shareholders voting in favor. The group vowed to keep putting pressure on Uber and other companies (the Teamsters have put forward a similar proposal with Lyft) in order to gain more ground in the future.
Like other app-based companies, Uber’s business model relies on labor from gig workers and on its own regulatory arbitrage that allows it to skirt some traditional employer responsibilities including employee benefits and protections like minimum wage.
In 2020, companies like Uber, Lyft and DoorDash collectively spent over $200 million to pass Proposition 22 in California, legislation that would keep workers defined as independent contractors rather than employees. According to Uber’s 2021 U.S. Political Engagement Report, the company alone spent nearly $30 million on Prop 22.
Uber’s CEO Dara Khosrowshahi has said on multiple occasions that Uber would continue to loudly advocate for similar laws in other states. The company is currently doing so in Massachusetts, where in 2021 it contributed over $100,000 to a Prop 22-like ballot initiative put forth by the MA Coalition for Independent Work, a cohort of app-based ride-hailing and on-demand delivery companies.
Uber has also financially supported similar coalitions in Colorado, Illinois, New Jersey, New York and Washington, to varying degrees of success, according to the report.
Despite these disclosures, the Teamsters are seeking more transparency.
“I know what you’re disclosing. The biggest concern I have is what you’re not disclosing,” said Pryce-Jones, noting that Uber’s lack of disclosure represents a reputational risk, particularly in today’s cancel culture when it’s easy to end up on the wrong side of a socially fraught issue. “The question is, why aren’t you disclosing that? We do know that they’re being innovative in creating supposed independent worker coalition groups, which they disclose that they fund, but we don’t know how much, so that’s a critical hole in their current disclosures.”
Uber’s political engagement report discloses the amounts contributed for some of the coalitions for independent work, but curiously not for others. There’s also a lack of reporting the sums of money given to potentially undisclosed grassroots activity, according to the shareholder proposal.
“What is frustrating is that a company will justify to you everything they do disclose, but then they’ll come up with some reason why the extra amount can’t be disclosed, and they don’t provide good justifications for that given they provided the other disclosures,” said Pryce-Jones. “It only leads to a suspicion that there’s something to hide.”
Many corporations get away with undisclosed lobbying by contributing to 501(c)(4) organizations, which the IRS classifies as social welfare organizations but shady companies rely on to engage in electoral politics while keeping their funding sources secret. One reason for that is astroturfing, or creating the false appearance of grassroots activism, as Uber and its cohort have been accused of doing via various independent worker groups.
Uber’s board of directors recommends a vote against this year’s proposal, saying that such disclosure is unnecessary given the company’s “existing risk management practices” and the fact that it already has transparency around some, but importantly not all, lobbying activities.
In its statement of opposition, Uber says that it has made transparent the company’s corporate political contributions and independent expenditures, as well as a list of 501(c)(6) trade association memberships.
“We also publicly disclose state and local lobbying costs and activities where required by law,” the statement reads, perhaps unintentionally highlighting the fact that there is no state-to-state consistency on reporting lobbying activities, which allows Uber to circumvent full, nationwide disclosure to its shareholders. “Uber reported $2,060,000 in U.S. federal lobbying expenses and approximately $3,933,353 at the U.S. state and local levels in calendar year 2021. This level of transparency and detail is industry-leading relative to each of our U.S. ride-sharing and delivery peers.”
Even if it’s true to say that Uber is truly “industry-leading” in respect to its peers, which are other app-based gig companies, then it might also true to say that the bar for leading the industry is somewhere near the floor. After all, Uber and Lyft have both been accused of taking a page out of the tobacco industry’s lobbying playbook by spending millions to challenge independent research that’s critical of the companies, pay for their own self-serving studies, manipulate the media, create fake grassroots movements and more.
Yet Uber argues, essentially, that it knows what it’s doing, and its shareholders should trust management to make them money, despite the fact that the company’s unrestricted cash has sharply declined since its peak mid-2019.
“Strong governance and risk management systems are critical parts of Uber’s political and lobbying activities,” reads Uber’s opposition statement, which goes on to list the various corporate checks and balances that exist within the organization “to ensure consistency and to ensure that our contributions comply with Uber policies and procedures, as well as applicable laws, regulations, and corresponding legal reporting requirements.”
The company also says that it has developed lobbying principles, “which are focused on compliance, honesty, integrity, professionalism and diligence,” that must be adhered to by consultants who lobby on Uber’s behalf.
While it’s unlikely that the Teamster’s proposal will pass Monday, given the board’s recommendation to vote against, it might move the needle toward more transparency in the future.
“At least disclose the overall bucket,” said Pryce-Jones. “Not necessarily how much is going to any individual organization, but just give us a sense of the quantum, how much. Because we literally don't know whether we're seeing the tip of the iceberg or we're seeing the whole thing.”