What Happens When Uber And Lyft Disappear From An Entire City?

I was visiting Austin from San Francisco for a friend’s bachelorette party over the weekend, and our group of revelers got a front-row seat for what the Austin Business Journal is describing as as ” Uber-geddon.”

Last week, both Uber and Lyft abruptly halted service in Austin after a ballot measure to lift restrictions on ride-hailing companies was defeated by voters. The two companies – though largely Uber, according to advocacy group Public Citizen– had spent more than $8 million to convince voters to reject regulations that include mandatory fingerprinting for drivers.

When those costly efforts failed, both companies skipped town on May 9, thrusting Austin back into the “stone age” (as some visitors complained) during a prime tourism weekend in the city.

It isn’t the first time regulatory battles have led Uber to suspend or scale back operations in some markets. But the sudden suspension of service in a large, tech-friendly city like Austin demonstrates the stakes in Uber’s many battles. And it raised an interesting question for me: As ride services have become ubiquitous, is urban life now inconceivable without them?

Our group of 12, along with many tourists and partygoers, turned to transportation alternatives including Get Me and zTrip (apps with far fewer drivers). Visitors also leaned on the kindness of hotel bellhops and doubtlessly stretched the limits of Austin’s pedicab services.

On a busy weekend for tourism in Austin, Uber and Lyft’s sudden pullout from the market dominated the chatter among taxi drivers, hospitality workers and the thousands of visitors spilling out of the city’s bars and restaurants around closing time. Our very accommodating driver, an airport chauffeur who offered our party his personal cell number to assist with rides, described the companies’ pullout as a “temper tantrum” leading to a form of calculated chaos.

The sudden void of Lyft and Uber meant long taxi waits at Austin’s airport, throngs of confused (possibly inebriated) visitors, and improvised solutions like the one we worked out with the airport chauffeur. But the scramble for customers and drivers alike also sends a message about the companies’ strategies for market saturation.

“I think they want to show if (governments) raise the stakes, they’ll raise the stakes,” said Rick Claypool of Public Citizen, a nonprofit that tracks Uber’s lobbying efforts. “They’re going out of their way to show that if there’s a city that’s passing regulations for whatever reason, you’re going to have an $8 million headache. And that might give some city councils or mayors pause.”

Uber’s growth-at-all-costs strategy has meant entering every possible market – in some cases illegally, says Claypool – and fighting local governments’ attempts at regulations by recasting those efforts as anti-tech or anti-competitive.

“It’s unlike anything we’ve ever seen,” Claypool said. “There is a clear pattern in what they are doing in these markets.”

In the end, Uber and Lyft’s campaigns – which included television ads, text and phone campaigns – didn’t work, with the Austin Business Journal reporting that voters were turned off by the companies’ aggressive marketing efforts.

In the case of the Austin vote, the fingerprinting mandate – a more time-consuming background check tool that inhibits Uber’s ability to onboard drivers quickly – represented a line in the sand for the 56 percent of voters who wound up supporting the regulations. But a host of other issues shaped by state and municipal bodies, such as insurance requirements, transportation service caps and even collective bargaining ordinances, have meant continuous friction for the company as it charges towards its ‘Uber everywhere’ ambition of global market saturation.

“They become the entrenched thing, the thing that’s expected to be there,” added Claypool. “Anything that’s perceived as slowing that momentum is the fundamental problem.”

Only time will tell whether competitors like taxis or app alternatives can successfully fill the ride-hailing void in Austin, at least for now. But it shows that in spite of Uber’s staggering spending on political lobbying, the company’s dominance isn’t yet a foregone conclusion.

Source: San Francisco Business Times, Annie Gaus
Photo: A line of taxicabs waits for fares at the taxicab stand behind the JW Marriott Hotel in downtown Austin. (Michael Theis, ABJ)