If a "Greyballed" official attempts to hail an Uber cab as part of a sting operation, the app would immediately cancel the ride hail. The company would then display a fake version of the app to the "Greyballed" phone, complete with ghost cars that don't exist.
This is how Uber justified its use of the program: "This program denies ride requests to users who are violating our terms of service -- whether that’s people aiming to physically harm drivers, competitors looking to disrupt our operations, or opponents who collude with officials on secret 'stings' meant to entrap drivers."
The company line: This is to protect drivers
So far, Uber maintains it did this to defend drivers from entrapment or even violence -- despite the fact that it's come under fire several times over the last few years for doing just the opposite for its drivers. Uber says it deployed Greyball and its wider program under the "violation of terms of service" (VTOS) to defend against groups like taxi unions looking to undermine the company or even harm its drivers. In places like Paris, where the tension between Uber and taxi drivers resulted in violence and Courtney Love tweets comparing the city to Baghdad, ghost cars were used hide Uber drivers from retribution. Greyballing's use has definitely grown beyond that, however.