The ride-hailing companies Uber and Lyft have said they are suspending operations in the Texas city of Austin after losing a vote that meant their drivers would be subject to criminal background checks, including having their fingerprints taken.
The companies wanted to overturn a city ordinance which mandates such checks saying their’s are already rigorous and ensure safety, even though critics have said they are not thorough enough to weed out potentially dangerous workers.
It was an expensive loss for Uber and Lyft which spent $8.6 million (7.5 million euros) campaigning for the reduced checks.
They had mounted a campaign to demand and get support for the vote, which they lost by 56 percent to 44 percent. Turnout was 17 percent.
Taxi and limousine drivers in Austin have to undergo fingerprint-based checks and both Uber and Lyft do operate in Atlanta, Georgia and New York City despite regulations requiring fingerprint background checks.
‘Welcome to stay’
Austin Mayor Steve Adler said in a statement: “The people have spoken tonight loud and clear. Uber and Lyft are welcome to stay in Austin, and I invite them to the table regardless. Austin is an innovative and creative city, and we’ll need to be at our most creative and innovative now.”
Uber’s Austin general manager Chris Nakutis said: “Disappointment does not begin to describe how we feel about shutting down operations in Austin. 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.”
Lyft issued a statement saying: “Lyft and Austin are a perfect match and we want to stay in the city. 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.
The company said it was pulling out of Austin as a matter of principle: “We have to take a stand for a long-term path forward that lets ride sharing continue to grow across the country.”
SXSW (@lyftaustintexas) 8 May 2016
The Austin group supporting mandated fingerprinting said the heavy spending was a signal that the Uber and Lyft campaign was motivated more by corporate profits than passenger safety.
The loss could persuade other cities to require fingerprint criminal background checks, encouraged that they can survive a bruising electoral battle with the ride-hailing services, analysts said.
The costly municipal election in Austin came as other cities consider imposing fingerprint-based background checks on drivers. The Austin election marked the first time a major US city put the regulations to a vote.