Tech’s transportation companies keep bending the knee to Saudi Arabia
Photo by Mikhail Klimentyev\TASS via Getty Images In an interview with Axiosthat aired November 10th, Uber CEO Dara Khosrowshahi called the murder of the journalist and US resident Jamal Khashoggi by Saudi Arabia “a serious mistake” — before quickly backtracking and admitting that it was his comments, and not Khashoggi’s murder, that were the actual mistake. But Khosrowshahi’s comments were not made in isolation. There is a pattern emerging of transportation companies with deep financial ties to Saudi Arabia being friendly to the regime in the face of international outcry. It’s bad enough right now for huge companies doing business in countries with oppressive regimes, as we’ve seen recently with China’s strong-arming of the NBA and Blizzard. But Saudi Arabia’s practice of directly investing massive sums of money in companies through its sovereign wealth fund has left multiple companies like Uber — and the executives who run them — particularly exposed. Companies that took money from Saudi Arabia’s wealth fund now find themselves exposed Just last month, Peter Rawlinson, the CEO of electric vehicle company Lucid Motors; Jay Walder, the CEO of hyperloop startup Virgin Hyperloop One; and Alejandro Agag, the founder of electric racing series Formula E, all heaped praise on Saudi Arabia while appearing onstage at the Future Investment Initiative conference in the Kingdom’s capital city, Riyadh. The conference, colloquially known as Davos in the Desert, was taking place at the same Ritz-Carlton that Crown Prince Mohammed bin Salman used as a prison in late 2017 during his massive power grab. The conference also became a political flashpoint last year, as a number of companies and executives backed out from participating following Khashoggi’s initial disappearance and assumed murder at the Saudi consulate in Turkey. None of this stopped those three executives, though. Rawlinson — whose company was saved by a $1 billion investment from Saudi Arabia’s sovereign wealth fund in 2018 — struck an obsequious tone while discussing Lucid Motors’ forthcoming electric sedan, the Lucid Air. “I’m really excited because Lucid Air’s going to launch in just over a year’s time, and I really want to say thank you to the Public Investment Fund (PIF) for making that a possibility,” he said. “Thank you so much.” Rawlinson also said he and his management team have a “huge commitment to helping contribute to the genesis of a motor industry here in the Kingdom of Saudi Arabia” — something that wasn’t part of the startup’s plans before the investment. (Lucid Motors’ marketing manager David Salguero declined to comment.) Lucid Motors’ CEO promised a “huge commitment” to fostering an automotive industry in Saudi Arabia Virgin Hyperloop One was one of the first companies to back out of last year’s conference, with then-chairman Richard Branson pausing a $1 billion deal between the Kingdom and his space company and saying that the state-sponsored murder of a journalist “would clearly change the ability of any of us in the West to do business with the Saudi Government.” But Walder, who took over as CEO late last year, released a statement before this year’s conference saying he was “delighted” to attend. While Virgin Hyperloop One’s largest shareholder is a port operator from Dubai, Walder joyfully talked up the prospects of doing business in Saudi Arabia. “The opportunity is in front of us to create the first [hyperloop] manufacturing facilities anywhere in the world,” he said, before explaining that Saudi Arabia’s Economic Cities Authority believes a Virgin Hyperloop One facility could generate 124,000 jobs, a $4 billion increase in GDP, and $5 billion in “non-oil, high technology export products for the Kingdom” by 2030. What Virgin Hyperloop One is doing, he said, is “perfectly aligned with Vision 2030, with the message that says: ‘let’s develop new technology, let’s make it happen here, for the purposes of the Kingdom, but also to be able to look outward as well.’” Agag, who recently signed a 10-year deal worth hundreds of millions of dollars to host Formula E races in Saudi Arabia, bragged about having attended all three years of the conference. He said he “hope[s] to keep coming,” too, and asked Yasir Al-Rumayyan — the man in charge of Saudi Arabia’s sovereign wealth fund and a member of Uber’s board of directors — to “please invite” him back with a wink and a smile. Agag was there to announce that his new racing series, an off-road version of Formula E, would also stage races in Saudi Arabia. “The two main electric car championships are going to take place in Saudi Arabia,” Agag said. “And this would not happen of course without Vision 2030, and the vision of his royal highness, Prince Mohammad.” “This would not happen of course without Vision 2030, and the vision of his royal highness, Prince Mohammad.” Formula E first announced its deal with Saudi Arabia right around when the country lifted its ban on women drivers. But when Agag was asked about how Saudi Arabia jailed many of the women activists who agitated for that change, he deflected, citing Mohammed bin Salman’s audacious Vision 2030 economic plan as reason to believe that things could change. (Representatives for Virgin Hyperloop One and Formula E did not immediately respond to requests for comment.) While these executives’ comments were similar in their fealty to an authoritarian regime, they didn’t create much of a stir. Khosrowshahi’s comments, though, sparked backlash and the threat of a new boycott almost immediately. Within hours of the airing of the interview, the #BoycottUber hashtag started trending on Twitter. Social media users responded with outrage and disbelief that the Uber CEO would respond so flippantly to the assassination and dismemberment of an American journalist. Equating Khashoggi’s murder to the 2018 fatal crash involving one of the company’s self-driving cars in Tempe, Arizona and calling both incidents a “mistake” was doubly offensive to these people. As of 1:30PM ET on Monday, over 8,000 people had tweeted the #BoycottUber hashtag. Of course, neither death was an accident. As noted by Axios, the CIA has determined that the Saudi government had a direct role in Jamal Khashoggi’s murder. Likewise, the death of 49-year-old Elaine Herzberg after being struck by Uber’s self-driving car was not an accident, but rather the end result of a series of significant safety lapses, most notably vehicle software that was not programmed to brake for pedestrians crossing a street outside a painted crosswalk. So far, Uber has avoided criminal charges, but federal safety investigators are expected to assign probable cause for the crash later this month. Khosrowshahi’s comments sparked immediate backlash It’s too early to tell whether #BoycottUber becomes as damaging to the company as the #DeleteUber hashtag from early 2017, when the company was accused of profiting from a pro-immigrant / anti-Trump taxi driver strike at JFK Airport. According to New York Times scribe Mike Isaac’s retelling of the event, #DeleteUber resulted in “more than 500,000 people” deleting their Uber accounts in the span of a week, costing the company “millions” of dollars. Uber itself admitted to the destructive power of the hashtag in paperwork filed before the company went public. The company said the hashtag triggered a domino effect, causing drivers, restaurants, and other entities that rely on Uber’s massive customer base to flee the platform. The company warned potential investors of the impact of such consumer backlash: If Drivers, consumers, restaurants, shippers, and carriers do not establish or maintain active accounts with us, if a campaign similar to #DeleteUber occurs, if we fail to provide high-quality support, or if we cannot otherwise attract and retain a large number of Drivers, consumers, restaurants, shippers, and carriers, our revenue would decline, and our business would suffer. Khosrowshahi’s comments were especially shocking coming from the normally buttoned-up and reasonably well-liked CEO. Khosrowshahi spent most of his early days at Uber apologizing for the mistakes of his predecessor, Travis Kalanick, who was forced out of his company after an unprecedented series of scandals and self-owns. It hasn’t all gone smoothly for Khosrowshahi — Herzberg’s death took place eight months after he assumed the role — but most experts agree he has had some success rehabilitating Uber’s public image and has put the company on a more secure path. Khosrowshahi seemed to recognize the damage his remarks did almost immediately. According to Axios’ Dan Primack, the CEO called an hour after the interview to “express regret for the language he used.” The next day, the company emailed a statement to the publication walking back the comments, and Khosrowshahi said on Twitter that he said “something in the moment I don’t believe. Our investors have long known my views here & I’m sorry I wasn’t as clear on Axios.” There's no forgiving or forgetting what happened to Jamal Khashoggi & I was wrong to call it a “mistake.” As I told @danprimack after our interview, I said something in the moment I don't believe. Our investors have long known my views here & I'm sorry I wasn’t as clear on Axios https://t.co/RxapzktrXq— dara khosrowshahi (@dkhos) November 11, 2019 But whether that will be enough to tamp down the growing backlash will remain to be seen. More than most companies, Uber has shown itself to be remarkably resilient despite its inability to earn a profit. The company has survived an almost comical number of scandals, lawsuits, regulatory challenges, protests, boycotts, and more — and it’s still kicking. It’s probably safe to assume that a significant number of people who angrily deleted the app in 2017 are back to using it again. In today’s low attention span culture, it can be hard to keep track of what we’re angry about. Khosrowshahi’s willingness to stick his neck out for Saudi Arabia is also a sign that Uber’s true vulnerability won’t come from its customers, but from its shareholders. The company’s stock fell to an all-time low last week after the expiration of its lockup period in which early investors and employees were free to sell their shares for the first time since the IPO. Analysts predict that about 90 percent of Uber’s stock will be available for sale — but as noted by CNBC, many of those shareholders would be selling at a much reduced rate from when they originally bought into Uber. Private shareholders are relying on Khosrowshahi to steer the company to a sustainable and profitable future. Selling now would be acknowledging a bad bet. Khosrowshahi may have walked back his comments about Khashoggi’s killing, but his praise for Saudi Arabia — and more specifically PIF director and Uber board member Yasir Al-Rumayyan — remains striking. It underscores the reality that when companies like Uber, Lucid Motors, and Virgin Hyperloop One take massive investments from (or try to do business with) Saudi Arabia, those deals come with a far greater cost than what’s agreed to on paper.