6 Huge Companies Who Scammed Their Way To The Top
Some companies fudge the numbers, others exaggerate their marketing claims, and the odd outlier might even enslave a race of orange-skinned singing creatures to populate its whimsical workforce. That's business. It's to be expected. But some businesses cross the line between "the expected dishonesty and immorality inherent to capitalism" and "being straight up shady bastards." Here are a few of them.
Tidal Faked Its Numbers To Scam Millions Of Dollars In Royalties
Streaming is the new digital gold rush, and just like with the original edition, there's no shortage of grifters. Competition is fierce, but in 2015, Beyonce's husband and minor celebrity in his own right Jay Z decided to wade right in with a $56 million investment in Tidal. The music streaming platform's big selling point was that Jay Z, Beyonce, and Kanye West would initially make all their new work exclusive to it. Beyonce's Lemonade and Kanye's The Life Of Pablo managed to earn the duo $6 million in royalties from the plays they accumulated during their period of exclusivity. This was enough to make investors sit up, take notice, and strongly consider putting up with Kanye in order to get a seat on the bandwagon.
But while the rest of the world was rushing to cancel their Spotify subscriptions, a Norwegian newspaper dug into the play counts and found some irregularities. Tidal wasn't exactly transparent, but reporters eventually discovered they had a user base of around 3 million subscribers, but were posting 250 million streams. That means that every user would have had to have played Lemonade eight times a day. We know Beyonce fans are passionate, that would be a bit much even for them. Maybe.
A different paper found that the subscriber count may have been inflated too. A more accurate number would have been 850,000, while the rest of the users came from free trials. Tidal was punished for all this chicanery with a $200 million investment by Sprint, which boosted the company's valuation up to $600 million. Jay Z's latest album may have been called 4:44 because that's how many hours every single Sprint employee was required to listen to it every single day.
PayPal Used Bots To Ingrain Itself With eBay
PayPal is a bigger company than many banks, but back in 1999, it was a small start-up which few people knew about -- mostly because the idea of sending money over the internet sounded like witchcraft for acquiring cocaine. Peter Thiel and his sinister council of elders analyzed the situation and quickly realized that the limited adoption PayPal had was basically all centered around eBay. So they decided to stimulate that market. Er, sorry, we meant simulate.
PayPal created a bot that would peruse eBay for auctions. Then, recognizing that a big part of the eBay user experience was the email notifications users received ("Someone just outbid you on that used Alf toothbrush and there's only 23 minutes left!" or "Bids on your Waffle that looks like Ray Liotta are skyrocketing!"), the bot would email sellers to announce that it intended to bid to acquire their item as a charitable donation, but only if the seller was willing to be paid through PayPal. Sellers could email a reply to agree to those terms, and even if they didn't, it was still free advertising. But most sellers did agree, because it was a win-win for them -- higher bids and the feel-good vibes of contributing to a good cause. PayPal even partnered up with the Red Cross to ensure that its purchased items actually went to charity, and not just an endless vault somewhere on Thiel's Bioshock Island.
The bot not only provided advertising, but also faked a growing demand for PayPal's product and the illusion that PayPal was superior to eBay's native payment platform. If eBay uncovered the scheme, they could have very well banished PayPal from the platform, but instead they caved in to the supposed wave of the future and bought PayPal for a staggering $1.5 billion. Let that be a lesson in, uh, the effectiveness of badgering people and lying?
A Human-Like AI Turned Out To Be An Actual Person
We're all killing time until we have access to a Star Trek computer we can trust to run our lives for us. Programmers and researchers are hard at work on that very concept, so that one of these days we can have an AI assistant to boss around right up until it evolves beyond its programming and wipes us all out. And according to tech company X.ai, that day has already arrived, thanks to its virtual personal assistant, Amy Ingram.
Amy is aimed at busy management types, and she impressed users with her ability to easily schedule meetings for dozens of employees with the input of a few basic parameters. But what really wowed people was her human-like writing style. Amy has a vocabulary far beyond other virtual assistants, which are currently limited to simple confirmations like "Will do," or the occasional rogue "Die, inferior flesh-bot." According to X.ai's CEO, workers unaware that they were responding to a virtual assistant have asked Amy to greet meeting attendees in the lobby, have sent her gifts of chocolate and flowers, and have even flirted with her.
One little catch: Amy sounded human because she was human. Behind the AI facade was a bunch of X.ai employees glued to their monitors for long hours while pretending to be the same Amy for different people. They were ostensibly hired as product developers, but all they really did was spend 14.5-hour days "annotating" Amy's responses to make sure "she" had properly understood requests and wasn't responding with total gibberish.
AI does need this kind of training to get better at its job, but Amy flat-out wouldn't have functioned without constant support. The fact that it was marketed as a self-sufficient AI was about as accurate as ascribing deep intelligence to your Xbox. The meetings still got scheduled in the end, but the next time you're getting all thrilled about your new AI organizer sounding or acting real, assume that a bunch of underpaid peons with bloodshot eyes and half a dozen energy drinks coursing through their veins are what's really keeping your emails tidy.
Airbnb Created A Bot That Poached Craigslist Users
Back in the 2000s, if you wanted to rent a room for a few nights, you had to seek out the shadowy figure known only as "Craig." Craig would show you his list, ushering you into a whole new world of secondhand couches and firsthand sex work. But no monopoly lasts forever, and in 2008, Craig found himself challenged by a plucky band of rebels known as Airbnb. But how could this tiny company hope to compete against the Craigslist empire?
Well, it started by creating a bot that would message Airbnb users and offer to cross-post their listings to Craigslist. The Craigslist post would be identical, but the contact information would link to Airbnb. It allowed the company to advertise to Craigslist's massive user base while taking all of the revenue for itself, and the fact that it was against Craigslist's terms of service made Airbnb hesitate for about zero seconds. It was a clever technical achievement, and if they'd stopped there, it probably would've gone down as a naughty but valid growth strategy.
Airbnb did not stop there.
Entrepreneur Dave Gooden noticed that Airbnb was barely spending a dime on traditional advertising, yet people were flocking to post their listings there. Where the hell were all these users coming from? Gooden, acting on a hunch, posted a fake listing on Craigslist. Within hours, he received an email from a "young lady" telling him she loved his property and wanted him to check out this cool new site called Airbnb. He did it again, and again, and again, and every time received an email, each one more identical than the last.
Gooden went a bit overboard with his investigation. He created his own vacation rental website, complete with a thousand real people posting real listings. He essentially created his own Airbnb as a control site, which is like testing your theory that your partner is cheating on you by becoming director of the NSA and ordering a wiretap on their phone. Unsurprisingly, none of the rental listings on his control site attracted attention from the mysterious Airbnb promoter. However, posting those same listings on Craigslist soon generated an email. It was like if McDonald's could get away with advertising in front of the cashiers at Burger King.
Uber Sabotaged Lyft By Acting Like A Crazy Stalker
If we told you that a major corporation created a shadowy program named "Hell" to convert rivals to its cause, you'd probably assume it was the plot of a bad Netflix sci-fi show. But Hell is real, and Uber owns it. The name is a play on Uber's better-known "Heaven" tool, which allows the app to track the movements of people who use it. Unsurprisingly, Heaven was abused, with instances of Uber staff stalking politicians, celebrities, and even exes. But rather than stamp out its ethical issues, Uber decided that the obvious solution was to create a secretive piece of software named after the realm of the damned.
Only a select few employees were aware of Hell, which should've raised enough red flags to fuel Fleet Week. It was essentially a massive data-harvesting campaign designed to identify drivers who worked for both Uber and Lyft. This information was used to offer those double-dipping drivers more and better Uber fares, cutting Lyft out of the market.
Hell was only the beginning of Uber's crusade against Lyft. In 2014, the company hired teams of independent contractors to secretly harass and recruit Lyft drivers. This was referred to as the "SLOG" program, because Uber is apparently drawn to dumb nicknames like a Moore-era Bond villain. These "brand ambassadors" would summon a Lyft, then perform mid-journey presentations on the great opportunities offered by Uber. Uber's written instructions to operatives included strategic tips like to use "street smarts" and ask nonchalant questions like "Have you considered other ridesharing platforms?" Real subtle stuff.
But that's better than SLOG's other objective, which was to waste Lyft drivers' time. Contractors would call Lyft rides with burner phones, then cancel right as they were arriving. Lyft's internal investigation estimated that roughly 5,560 rides were canceled by SLOG operatives, mostly in new markets. The contractors even had a group chat to coordinate tactics, and their own internal hashtag, #shavethestache (a reference to the pink mustaches once attached to Lyft cars). It's hard to make a shadowy team of industrial saboteurs sound lame, but congratulations to Uber on finding a way.
OxyContin Was Pitched As Safe And Nonaddictive
You've probably never heard of the Sackler family, but their $13 billion net worth means they're among the global elite. They've donated massive sums to Harvard and Princeton, as well as the Met and the Louvre. They were known all over the world for their generosity, at least until their role in creating about as many drug addicts as Pablo Escobar was revealed. Yeah, the ongoing opioid crisis is something you've definitely heard of.
The Sacklers own Purdue Pharma and Rhodes Pharma, which own OxyContin and its generic equivalents, respectively. When OxyContin was first developed, doctors were cautious about prescribing what was essentially heroin in pill form. Pain meds that strong were generally saved for the intense agony of cancer and end-of-life care, not scratched fingers. But the Sacklers knew that they were sitting on a potential money-maker, if they could only get doctors to forget their pesky little consciences long enough to prescribe it.
Purdue launched a marketing blitz, and didn't even bother coming up with loaded in-house studies, instead letting their marketing department invent whatever claims they wanted. One slogan ominously pitched OxyContin as the drug "to start with and to stay with." They also fought against government regulations, and started exporting the drug to countries with weaker regulations. They even distributed their own textbooks to medical students, and have been accused of telling doctors that they were in danger of violating their Hippocratic Oath if they didn't prescribe opioids in certain situations. And it all worked.
In 2007, Purdue pleaded guilty to federal felony charges that the company misled regulators, doctors, and the public about OxyContin's safety. But you can't un-ring a bell made of highly addictive drugs. Hundreds of thousands of Americans are hooked on either prescription opioids or the street drugs they were led to, and tens of thousands have died. The Sackler family is facing hundreds of lawsuits and has devolved into bitter infighting. And while we're sure that will make for a fascinating Netflix drama one day, the 2007 ruling has done little to stem their profits.
Michael Battaglino is a contributor to Cracked.com. Be sure to check out some of his other work if you enjoyed this article.
Support our site with a visit to our Contribution Page. Please and thank you.
For more, check out What Really Happens After Your Company Gets Bought - Internet Content: Episode 2:
Follow us on Facebook. It's free.