Dive Brief:
- Uber's legal issues around its advertising business continued to mount this week as ad tech firm Phunware Inc. filed suit against the ride-hailing company for breach of contract, reported The Wall Street Journal. Phunware claims it's owed around $3.1 million in unpaid fees.
- The filing from Phunware comes a little over a week after Uber sued Dentsu's Fetch, its mobile ad agency, alleging Fetch billed it for fake online ads and nonexistent app downloads. That suit reportedly asks for at least $40 million in damages. At the time, The Drum reported that some of the 50 small business vendors under Fetch were planning to file countersuits against Uber to recoup their losses.
- Phunware was among the vendors Fetch contracted for Uber's digital ad campaigns and its lawsuit contends Uber didn't pay Fetch for five invoices that, in turn, kept Fetch from paying Phunware $3.09 million in work. In response to the filing, Uber said in a statement that Phunware was one of the networks involved in the online ad fraud uncovered in its internal investigation and it looks forward to presenting its evidence in court.
Dive Insight:
Uber has been no stranger to either the courts or controversy this year, getting wrapped up in a legal battle with Google's Waymo self-driving car division over allegedly stolen trade secrets, along with facing PR hits pertaining to charges of sexism and harassment within the company and the ouster of founder and CEO Travis Kalanick. The lawsuit against Fetch and the new countersuit from one of the agency's vendors are a bit different, however, in that the issues Uber has cited in its claims are ones that have become all too familiar in digital advertising — namely, that the space is overrun with ad fraud and non-transparent business practices.
Uber's legal case for stopping payment came after internal review rather than a third-party audit. The Journal also noted that its agreement with Fetch and Phunware is governed by standards set by the IAB. Those standards suggest that if Uber doesn't pay Fetch the money it needs to compensate Phunware, the ride-hailer could instead be liable for those payments.
While these elements, combined with Uber's generally poor PR image, present a case that's potentially less than rock-solid, the bigger picture is that digital advertising is still unnecessarily murky with vaguely-worded contracts that allow agencies a great deal of wiggle room with things like billing practices. Industry groups including the Association of National Advertisers (ANA) have been addressing these problems in increasingly strident terms. Last summer, the ANA published a report with K2 Intelligence that found a "fundamental disconnect" between brands and agencies, with agencies often drawing up contracts that included rebates their clients weren't privy to.
Uber spent more than $82.5 million in ad campaigns handled by Fetch from 2015 to early 2017, Ad Age previously reported. Dentsu Aegis, Fetch's parent holding company, wasn't named in Uber's suit.
