Uber and Lyft’s future in Austin, if their threats are to believed, hang in the balance as the city’s residents vote on Saturday.
At issue is whether the ride hailing companies must fingerprint their drivers annually, like taxi operators already do, in an effort to provide comprehensive background checks that ensure passenger safety.
Austin’s city council passed an ordinance in December requiring “Transportation Network Companies,” the regulatory term for these services, to fingerprint drivers. But the companies are strongly opposed to the idea and have pushed for a ballot measure that would reverse the decision.
In addition, the vote on Prop. 1 could reverse other regulations passed at the same time about how the companies pay fees to the city, access to Austin’s airport, and restrictions during large festivals like South by Southwest.
In an attempt at a compromise, Austin’s city council passed an optional fingerprinting program, dubbed ThumbsUp, that gave Lyft and Uber drivers who submit to fingerprinting access to certain zones they are currently banned from like the cellphone parking lot at the Austin Bergstrom International Airport. Previously, only taxis could go there and wait until they find a passenger to ferry.
Despite the program voluntary nature, the ride-hailing companies argued that it discrimination against drivers who declined to get fingerprinted. In response, they pushed to get Prop 1 on the ballot to reverse not only the new fingerprinting rules, but also the other regulations they opposed.
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The stakes
Both Uber and Lyft have made it very clear that if Prop 1 fails to pass on Saturday they would close up shop in Austin, one of their biggest markets in Texas and in the U.S., for that matter. As part of their campaign, the companies have funded a barrage of text messages, fliers, and TV commercials to get out the vote.
“We’re hopeful that people will vote FOR Prop 1 on Saturday but must prepare for all outcomes. If Prop 1 fails, Lyft will shut down at 5am on Monday,” Lyft’s Austin general manager, Aaron Fox, said in a text message sent to Austin customers recently.
Uber sent a similar message: “Ridesharing is on the ballot and early voting ends tomorrow! Can we count on your vote FOR Prop 1 to keep Uber in Austin?”
Although both Uber and Lyft have loudly said that they are ready to pull out of Austin, there remains some doubt about their resolve to do so if the vote goes against them. After Houston introduced a fingerprinting requirement for ride-hailing drivers in 2014, only Lyft decamped.
However, Uber is now threatening to leave Houston as well, implying that fingerprinting regulations are a critical issue for the companies more broadly. They require that the companies take additional steps and time to recruit drivers while also setting an unpalatable precedent that other cities could follow. If anything, the last message Uber or Lyft would want to send to other local and state governments is that they would consent to more layers of regulations.
It’s a power struggle, plain and simple.
The politics
Uber and Lyft have been vocal about their opposition to fingerprinting for quite some time. But it’s intensified following the passage of Austin’s fingerprinting ordinance in December that would require ride-hailing companies to get 99% of their drivers fingerprinted by February 2017.
The companies quickly began collecting the 65,000 required signatures to force a vote on their proposition. They also kicked off an expensive political campaign by pouring more than $2 million in 2016 alone into a local organization called the Ridesharing Works for Austin, which has been championing their cause on their behalf in favor of Prop 1.
“Tens of thousands of Austinites have rallied behind ridesharing, and Lyft is continuing to support efforts to make sure their voices are heard on May 7th,” a Lyft spokeswoman told Fortune. Ridesharing in Austin has created new economic opportunities, is providing a critical element to the Central Texas transportation network and is keeping drunk drivers off the road,”
Uber did not respond to a request for comment.
The battle has also spilled into Austin’s startup scene. Joshua Baer, executive director of the startup co-working space and mentorship program, Capital Factory, arguably one of Austin’s most visible startup organizations, has publicly supported Prop 1.
Mike Maples, Jr., co-founder and general partner at venture capital firm Floodgate, has said on Twitter that his firm would no longer invest in so-called “on-demand” startups in Austin anymore because of the ongoing fight. “Local government too hostile,” he tweeted in February.
https://twitter.com/m2jr/status/702736102088511488
Last month, U.S. Chamber of Commerce president Amanda Eversole sent a letter to U.S. Transportation Sec. Anthony Foxx that questioned Austin’s eligibility as a finalist in the Transportation Department’s Smart City Challenge. The competition, which has been winnowed to seven finalists, would grant the winning city $40 million to help it fund projects involving new technology and transportation.
Austin’s current, and more strict regulations, Eversole argued, are not conducive to the program’s goals. Her argument is intended to pressure Austin’s government into backing down on its fingerprinting rule by pointing out the potential financial consequences.
“Clearly, this would be a setback to the Smart City approach, which should leverage an ‘all of the above’ approach when it comes to mobility and access,” she wrote.
Is fingerprinting safer?
All politics aside, the central question for Austin residents is whether fingerprinting helps to make passengers safer. The taxi industry has long argued that it does help, and that ride-hailing services should be subject the same safety requirements that they adhere to.
On the other hand, Lyft and Uber have argued that their existing background checks, which involves verifying each driver’s address, criminal, and driving histories, are more than adequate. In fact, they say their checks are more comprehensive than fingerprinting because they check court records in all states where drivers have lived instead of relying on federal databases, which they claim can be incomplete. Uber uses third-party background check provider Checkr, while Lyft uses Sterling BackCheck, a similar service.
On Saturday, Austin’s voters will show which side they believe—or at least, how badly they want Lyft and Uber to stick around.
