Austin Kicks Uber and Lyft to the Curb

What started out as one segment of the sharing economy has turned into billion-dollar valuations for ridesharing companies such as Uber and Lyft. But in recent years, concerns over drivers’ compensation have galvanized the labor movement as workers pushed back against the growing “gig economy.” And worries over passenger safety led to more cities’ attempts to regulate the likes of Uber and Lyft.

Austin, Texas, for example, wanted to require the fingerprinting of drivers, ban the pick-up and drop-off of passengers in certain street lanes, and have cars identified with company logos.

Uber and Lyft wanted none of that, and poured resources into a proposition that would have overturned regulations passed by Austin’s city council late last year. Together, Uber and Lyft were reported to have spent over $8 million convincing Austin’s 885,000 residents to vote “yes” on Proposition 1, while opponents of the measure could only raise $125,000.

But last Saturday, Austin’s voters rejected Prop 1 in a landslide, by 56 percent to 44 percent. In what was described as the most expensive campaign in Austin’s history, Uber and Lyft ended up spending about $200 on each “yes” vote.

As a result, both Uber and Lyft have said they will suspend operations in Austin for now. One ridesharing service, GetMe, said it will abide by Austin’s rules and plans to recruit new drivers in the Texas state capital.

The results, according to some local Austin leaders, are a victory for cities that say they welcome ridesharing companies, but on their terms, not on the demands of the likes of Uber and Lyft.

The Austin vote is a loss for Uber, which had long been accustomed to getting its way across the U.S. in cities such as Portland, Oregon. In an effort to bend cities’ will to allow Uber into new markets on its terms, the company has hired the likes of Barack Obama’s 2008 campaign strategist David Plouffe to lobby city councils and mayors across the U.S. The results have been spectacular for Uber, which is valued well over $60 billion, though some critics have suggested its valuation has reached its peak (Lyft, in contrast, is estimated to be valued at a figure one-tenth of Uber's).

Uber and Lyft certainly did their best to muscle voters into voting for Prop 1. The companies’ campaign site touted what they called the obvious reasons to let these companies self-regulate: a decrease in drunk driving accidents; affordable transportation that also “created” 10,000 jobs; and what the companies described as a reputation for safety that should appeal to all demographics.

But both companies stand accused of crossing the line between political hardball and dirty tricks. For example, Uber was accused of sending pro-Prop 1 text messages to users of its service, which led to a complaint with the Federal Communications Commission (FCC) and a lawsuit filed by a local activist. Both companies were also accused of offering free rides to polling stations so that locals could vote. Of course, on that matter, attorneys can parse over these companies’ terms and conditions of use endlessly — after all, Uber says it has the right to send messages “including information about products, services, promotions, news, and events of Uber and other companies.” Nevertheless, many voters felt such tactics and unsolicited text messages were in bad form.

But complaints about deceptive campaign practices are moot, anyway, as the 17 percent of Travis County voters who bothered to show up on Saturday were largely turned off by the amount of money Uber and Lyft threw at them in order to get their way.

In this case, money didn’t buy love, happiness or even a “yes” vote. Austin’s vote was less about transportation policy than a rejection of aggressive voting and marketing practices which made it clear that Uber and Lyft were not thinking about Austin’s commuters, but rather about conducting business on their terms without local citizens’ input.

Image credit: Mark Stevens/Flickr