Uber, Lyft at Center of Innovation Debate in Austin and Houston

Austin—It’s not uncommon for controversy to follow the entrance of ride-hailing services like Uber and Lyft into a new market. But right now, in two Texas cities—Austin and Houston—the rhetorical salvos have started again.

In Austin, for example, voters will go to the polls Saturday for a referendum to decide whether to overturn that city’s fingerprinting-based criminal background checks on the companies’ drivers. The Austin City Council had passed the regulation last December, which called for phasing in fingerprinting for those who work for the ride-hailing apps.

If voters uphold the restrictions, both Uber and Lyft have said they will discontinue service in Austin. And last month, Uber said it would leave Houston if similar rules—enacted in August 2014—weren’t repealed.

There’s some bite to that threat. The companies have pulled out service this spring from Galveston and Corpus Christi in protest of such security rules.

Supporters of the fingerprinting restrictions say those threats amount to commercial blackmail and that the regulations are needed to ensure public safety, something well within city leaders’ purview to regulate.

The debate has now evolved beyond the parameters within which ride-hailing companies can do business and into a discussion of what being an innovative community means. The social media chatter over the past few weeks has been heavy and heated, with some saying the companies’ demands amount to commercial blackmail. Those against the regulations say city leaders are stifling innovation in a town that prides itself on being at the cutting edge of technological advances.

Several prominent members of Austin’s innovation community have been outspoken in their advocacy for Uber and Lyft remaining in the city. “If Prop 1 fails,” writes Capital Factory founder and executive director Joshua Baer on his blog, “Austin sends a message to the rest of the world that says, ‘Innovation is not welcome here.’ ”

Joseph Kopser founded RideScout, a transportation mobile app that he sold to Daimler-Benz two years ago. A transportation enthusiast, he has long supported alternative ways to commute. He, too, has come out in support of the ride-hailing companies. “We find our community debating an issue that has worked well for two years,” Kopser wrote in his blog. “At the end of the day, the benefits far outweigh the system’s imperfections.”

The outcome of Saturday’s vote could impact other cities. An Uber victory in Austin could give its position there some support, and also could impact other cities like Los Angeles and Miami, which are also considering a fingerprint requirement.

(Houston Mayor Sylvester Turner responded to Uber’s threat by telling the Houston Business Journal he hopes the service will stay in the city. “But if I have to choose — and I believe this city will choose — between public safety on one hand and Uber staying on the other, I don’t think it’ll be close.”)

Late on Wednesday, a class-action lawsuit was filed in federal court against Uber over “robo-text messages” the company has been sending to Austin area customers that asked them to support the company in the election. The suit claims that Uber violated the federal Telephone Consumer Protection Act by sending the unwanted texts without prior consent.

The unsolicited texts were the subject of many complaints over social media from people put off by the aggressive campaigning.

In total, the Austin American-Statesman has reported that Uber and Lyft have spent more than $8 million, an astonishing amount for municipal referendums that typically receive scant attention and low voter turnout.

“Sheesh, Uber,” tweeted Austin political consultant Harold Cook last week, “for $8.1 million you could have damn near fingerprinted everybody in Austin.”

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