Uber and Lyft just lost a heated $8 million campaign to block tighter regulations on ride-hailing companies in Austin, Texas, including stricter, fingerprint-based background checks for drivers.
On Saturday, Austinites voted down Proposition 1, a ballot measure sponsored by Uber and Lyft, which aimed to do away with the need for fingerprinting drivers to vet their histories, as well as banning them from picking up and dropping off customers in traffic lanes.
Uber has already announced that it will make good on its threat of abandoning Austin if the proposition failed, and issued a heads-up that operations will cease by 8:00 AM local time on the morning of Monday, May 9. "Disappointment does not begin to describe how we feel about shutting down operations in Austin," said Chris Nakutis, Uber's Austin general manager, regarding the vote. "We hope the City Council will reconsider their ordinance so we can work together to make the streets of Austin a safer place for everyone."
Likewise, Lyft issued a statement on Saturday night that reads like an attempt to lay a city-wide guilt trip on Austin. "Lyft and Austin are a perfect match and we want to stay in the city," the company said, presumably while Adele's "Rolling in the Deep" played in the background.
"Unfortunately, the rules passed by City Council don't allow true ride-sharing to operate. Instead, they make it harder for part-time drivers, the heart of Lyft's peer-to-peer model, to get on the road and harder for passengers to get a ride. Because of this, we have to take a stand for a long-term path forward that lets ride sharing continue to grow across the country, and will pause operations in Austin on Monday, May 9th."
Meanwhile, Austin mayor Steve Adler defended the outcome of the vote, commenting that "the people have spoken tonight loud and clear," with 56 percent of roughly 90,000 voters opting to trash Prop 1.
"Uber and Lyft are welcome to stay in Austin, and I invite them to the table regardless," Adler said. "Austin is an innovative and creative city, and we'll need to be at our most creative and innovative now."
In other words, the ball is in Uber and Lyft's proverbial court. As CityLab reporter Kriston Capps pointed out this week, this means that the two companies are locked in a prisoner's dilemma scenario requiring both to stick to their guns and resist undercutting the other if they want to get their way.
While it remains to be seen what tack the startups will take in the coming weeks, it's worth noting that when a near-identical spat over fingerprint-based background checks went down in San Antonio last year, Uber and Lyft both returned to the city in short order. So if recent history is any example, Austin may not be bereft of widespread ride-hailing services for long.