Uber Argues Driver Names Are ‘Closely Guarded Trade Secrets’

Uber Technologies Inc. and Lyft Inc. have argued to Chicago city officials that the names of their drivers should be treated as “trade secrets,” and should not be released because competitors could use the information to attempt to hire them away.

This year, Chicago denied a Freedom of Information Act request asking for the names of drivers for use in an academic project. In a letter related to the request reviewed by Bloomberg, the city explained that it could not release the names in part because the companies had asserted that “would cause competitive harm specifically by allowing their competitors to target and ‘poach’ their drivers.” The request is now being reviewed by the Illinois attorney general’s office.

Peter Norlander, a Loyola University Chicago business school assistant professor, requested the names in 2018 and again this year as part of an effort to research the overlap between the ride-hailing companies’ workforces. He argued that the information should be public given that the drivers are licensed by the city to work with Uber or Lyft. The city lists names of licensed livery, carriage and taxi drivers online, and allows people to look up particular livery, carriage and taxi vehicles and see the person or company that owns each vehicle’s license. Equivalent information about ride-hailing licenses, however, is not included.

Previously unreleased documents reviewed by Bloomberg illustrate the companies’ acute concern that their drivers not abandon their platforms. In letters to the city, companies offered a series of reasons for not wanting the names disclosed, including the safety and privacy of drivers, the potential disclosure of competitive market share data, rules around keeping identities of vendors and customers private, and the possibility of poaching.

“Driver lists are one of Uber’s most closely guarded trade secrets,” an Uber attorney wrote in a 2014 letter that was cited by city officials and disclosed by the state as part of Norlander’s Freedom of Information Act review process. “Uber’s competitors could use the list to poach drivers from the Uber platform, thereby undermining one of Uber’s key competitive advantages.” A letter from Lyft echoed that argument, saying disclosure of driver names could “lead to aggressive targeting” of them and cause the company “competitive harm.”

Norlander said increased competition for drivers’ labor could help them by bidding up their pay. “The companies are trying to suppress information that should be public that would have the effect of improving workers’ wages,” he said. “It’s in the public’s interest that there is robust competition, and public disclosure of these records would enable and further that competition—by the companies’ own admission.”

In an emailed statement, Uber spokeswoman Kelley Quinn said, “Our position on disclosing confidential, personal, or proprietary information has not changed.” The company said that it takes substantial resources to get a pool of eligible and licensed drivers, and obtaining its driver list would make it easy for a competitor to target them for recruitment. A Lyft spokeswoman said that its drivers are free to work with any other company, and that there were no grounds to say that not sharing their information would prevent them from making money.

Isaac Reichman, a spokesman for Chicago’s Business Affairs and Consumer Protection department, said in an emailed statement that the state’s Freedom of Information Act law stipulates that data sets “provided to the city with the claim that they are trade secrets” are “exempt from disclosure.” For that reason, he said, Chicago “declines to release driver names” because that information was given to the city “under the claim that the data is proprietary and confidential in nature and that its disclosure would cause significant harm to the businesses that submitted it.”

A spokeswoman for the Illinois attorney general said only that the review of the issue was ongoing.

In one of the 2014 letters disclosed by the state to Norlander, an Uber attorney wrote that the company’s “highly confidential trade secrets,” such as driver lists, were protected by laws including the Takings Clause of the U.S. Constitution’s 5th Amendment, which restricts the government from taking private property without compensation. In another, Lyft referenced an article on allegations that Uber employees booked and then canceled more than 5,000 Lyft rides as part of its efforts to recruit drivers to switch companies—a practice Uber has alleged that Lyft engaged in as well.

Concerns over privacy could be a valid argument against releasing driver names, said New York University business school professor Arun Sundararajan. But asking the government to shield the names in order to prevent poaching is less compelling, he said, given the substantial overlap that already exists between Uber and Lyft drivers and the companies’ insistence that they don’t exercise enough control over the workers to legally be their employers. “Given the arms-length relationship that Uber and Lyft have tried to maintain with their drivers, the argument that a driver list is an important source of competitive advantage seems weaker,” he said.

Both Uber and Lyft, whose business models rely on armies of drivers they classify as independent contractors who aren’t covered by employment protections like overtime pay, have voiced concern about their ability to attract and retain the workers they need. In an April filing prior to its initial public offering, Uber warned that in an improved economy, drivers could migrate away to other sorts of work, and that as it tried to save money by subsidizing rides less, “we expect driver dissatisfaction will generally increase.” The company also said that forcing it to treat drivers as employees, as could happen under a bill now pending in the California state senate, “would require us to fundamentally change our business model.”

The companies’ relationship with drivers “gets at exactly the question at the heart of the platform business model, which is how to exercise maximum control at the same time as being minimally responsible,” said University of Utah economist Marshall Steinbaum. Preventing the release of workers’ names holds down their wages and also makes it harder for labor groups to try to organize them, he said, and the companies’ success so far on the issue reflects their sway in regulatory disputes with governments. “What the platforms want is not a ‘free market,’” Steinbaum said. “What they want is market power.”

University of San Diego law professor Orly Lobel said trade secrets law is meant to protect truly proprietary information like recipes, not information like licenses that have been issued by the government and are already displayed on vehicles across the city. She said that there’s no reason for the government to try to make it harder for workers to jump ship for better jobs, adding, “It’s not a legitimate business interest to just prevent competition.”

Original story from bloomberg