A number of interesting questions arose in some online forums around a company called Raiser or Rasier LLC in regard to its connection to Uber. So, we decided to do some research and rather than rely on hearsay and fantasy, delved into the paper trail and discovered something quite interesting.
Rasier LLC is a wholly-owned subsidiary of Uber Technologies. It was founded back in 2013 by Travis Kalanick and Uber as a subsidiary TNC to collect the income from ridesharing, leaving Uber to be a holding company that manages corporate issues as well as research and development. This structure is commonplace in many industries, and as such, Rasier LLC is a front for Uber, separating it from Uber and protecting it from any illegal, unlicensed, and practically uninsured services that might arise from ridesharing in California.
Rasier, as a subsidiary of Uber, and the direct TNC management company is liable for all ridesharing issues, and this is evident from lawsuits against Uber and Rasier, as in the case of Wilshire Law Firm filing a suit against Rasier, Raiser, and Uber for price discrepancies in Uber’s upfront pricing model in April 2017. In this federal court case, Uber driver Sophano Van who was represented by Wilshire Law Firm Bobby Saadian and Daniel Miller in a class action suit. Van claims that the upfront pricing system is misrepresenting the truth and that Uber presents one price to the customer but offers a different income model to the driver, which creates a delta of unpaid income from the difference between the accepted price and the real ride price. This reached through the following misrepresentation technique: Uber send the customer a pricing based on a navigational estimation that is then accepted by the customer. Uber then send the driver a different navigational route which is cheaper than the one the customer was quoted for, creating a discrepancy in the amount charged the customer and the amount to which the driver is paid. This is a direct violation of the driver agreement that Uber signed, and they intend to use this class action to stop Uber from abusing drivers and passengers alike.
In another instance, dating back to June 2016, Fresno Yosemite Airport signed an Agreement with Rasier CA LLC allowing UberX ridesharing to access the airport arrivals terminal. According to Uber's website, Rasier LLC is a wholly-owned subsidiary of the company that partners with ridesharing driver. This was stopped in May 2017 when one of the Fresno Cities requirements was that Uber enables tracking and reporting of their drivers' trips to the airport through a third-party clearinghouse. This was put in place by the airport authority demanding a $3 per trip, since the airport's income dropped due to less passenger parking, as they relied more on rideshare rides to and from the airport. Uber placed a Geo-fence around the airport and drivers can no longer service the airport.
Just to be exact, here is the text from Uber's website:
"Where does Uber accept service of legal documents?
We generally require that all legal documents (including complaints and subpoenas) be served on our registered agent for service of process. The name and current contact information for the registered agent in each state are available online here.
Our registered agent will accept service only if the entity to whom the document is directed matches the name of the entity registered with the Secretary of State (e.g., "Uber Technologies, Inc." or "Rasier, LLC"), and our agent is authorized to accept service on behalf of that entity. Our acceptance of legal process does not waive any legal objections we may have and may raise in response."
Now, if you thought Rasier was enough, you thought wrong. Uber uses many subsidiaries for many reasons, and as such, legally separates different aspects of its activates from the holding company through its many subsidiaries.
Here is a breakdown of the many subsidiaries that Uber owns, and for what purposes they were set up.
Rasier is the TNC subsidiary used in the US to manage the ridesharing contacts between Uber and the drivers, effectively separating the driver contract from Uber, since it was signed by the driver and Rasier.
Unicorn is the subsidiary used by Uber to buy out OttoMotto, the company now involved in the Waymo case, where Waymo claims that Uber stole secrets from Waymo when they bought out OttoMotto, company set up by a previous Waymo executive that is claimed to have stolen over 14,000 documents from the company before leaving to set up his own autonomous car startup.
Another subsidiary that Uber instated to deal with is "Apparate International CV," a Dutch Company was set up to check OttoMotto's business practices and fund its operations before merging with it.
It seems that Apparate International CV's executive is the same as those involved in Uber's Advanced Technology Group and included Justin Ho, Jeff Holden, and Lior Ron. Where Lior Ron is one of the key witnesses named in the Waymo lawsuit. What is fascinating is that Apparate is controlled by Neben LLC, a Delaware company and was part of a group of Delaware companies used to orchestrate the OttoMotto merger, including the Zing merger Sub I LLC that no longer exists.
UberAcht or Uber 8, is an NYC based subsidiary set up to deal specifically with Uber ridesharing in NYC, since they have different requirements to all other cities in the US and has 29 subsidiaries in NY, starting with UberAcht and climbing up to Einundzwanzig LLC which stands for 21 in German.
According to Associate Professor of Management at Columbia Business School Evan Rawley, Uber has to set up subsidiaries to manage local market ordinances. Since each location comes with different sets of rules and regulations that require location-specific management.
This was confirmed by Uber, stating they operate in over 600 cities around the world and each location demands a local specific or hyper local presence.
While some of these subsidiaries are obvious, such as Rasier, others are less so, such as Unicorn. This company only appears in the Waymo case in a draft document that was created for the OttoMotto merge deal. The proposed acquisition states that the project name is Zing and there would be three associated parties involved, OttoMotto, Uber, and Unicorn. Unicorn's role in the merger would be to pay for due diligence reporting before the purchase. Due diligence is a standard procedure in all large purchase contracts.
One lawyer stated that it is customary for companies to incorporate subsidiaries for single purpose actions once the purpose has been met the subsidiary is closed. In the OttoMotto contract, what would end up would be Uber on top with OttoMotto at the bottom and Unicorn in the middle acting as an intermediary holding company. Which is similar to how Uber holds Rasier that contracts drivers.
Coming back to Apparate International CV, it seems that this company is a little bit more mysterious that Rasier LLC. It is a Bermuda registered Dutch partnership. Bermuda is an international a tax haven, and the company was used to create ownership of patents from both OttoMotto and Uber International CV, another Uber company.
Confused? Don't be; it's really quite simple:
- Uber sets up Rasier LLC to act as an intermediate subsidiary that manages all driver contracts.
- Uber sets up Unicorn to act as an intermediary to help buy out OttoMotto LLC
- Uber sets up an international consortium of Apparate International CV and Uber International CV, Dutch-based companies set up in Bermuda, where they buy Autonomous Vehicle patents. Any profits generated by these companies will be tax-free.
- Uber sets up 29 subsidiaries in NYC to manage different aspects of its rideshare issues specific to NYC regulations.
- Uber sets up many subsidiaries for focused one-off deals and subsequently closes them when the deal has been concluded.
So, if you thought to be a billionaire was about owning shares in Uber, think again, it's about being extremely clever and understanding how tax law, legal ramifications, and ownership, as well as liability, are all balanced in a way to maximize income and reduce personal risk.