What happened when Uber and Lyft shut down in Austin, Texas

A large regional city with a progressive bent wants to impose new rules on Uber and Lyft. The ridesharing giants threaten to leave the city. The dispute becomes the hottest issue in town. The Legislature gets involved.

It could be Minneapolis in 2024, as it tussles with Uber and Lyft over a minimum wage for drivers. But it's also Austin, Texas, in 2016.

Austin lost Uber and Lyft service for more than a year after the companies fought a city ordinance requiring drivers to be fingerprinted to protect passengers. The players, the locale and the politics may differ, but the final result could be the same.

Uber says it will cease operating in the Twin Cities, while Lyft claims it will shut down in Minneapolis if the pay minimums stand. Meanwhile, city and state elected leaders in Minnesota are frantically trying to craft a solution before the Legislature adjourns May 20.

Austin's experience shows how such a conflict can play out in a tech-savvy, car-dependent, party-loving town that famously embraces its weirdness. It's a story about a Democratic stronghold in ruby red Texas that took on two brazen companies offering a wildly popular service and winning in convincing fashion. But its victory was short-lived. Republican lawmakers overturned the new rules.

What hasn't changed since then is that Uber and Lyft are still willing to leave town if they don't get their way. "Uber has changed a lot over the years, including how we make our case for positive regulations, but one thing has been consistent: leaving a city has never been a decision we've taken lightly," said Josh Gold, a company spokesman.

A safety issue

In 2015, about a year after Uber and Lyft began service in Austin, several cities in Texas adopted regulations requiring ridesharing companies to fingerprint drivers following several reports of drivers having sexually assaulted passengers.

"It was truly a safety issue for women," said Ann Kitchen, a City Council member who led a committee that crafted Austin's fingerprinting ordinance. "There was no reason for [Uber and Lyft] to not do it."

At the time, taxi, limousine, even pedicab, operators in Austin were fingerprinted as part of the city's licensing process. But not Uber and Lyft, which claimed their security screening process worked just fine.

Lyft says fingerprinting is "a discriminatory practice with outsized impacts on communities of color," said spokesperson CJ Macklin last week. "The fingerprint background check system is widely considered incomplete and inaccurate and a discriminatory practice when used as a basis to deny work."

When San Antonio adopted a fingerprinting ordinance in 2015, both ridesharing companies ended service, returning only after it was deemed voluntary. After Houston required fingerprinting, Lyft left, and Uber stayed on.

Both companies warned if Austin adopted a fingerprinting measure, they would leave. Despite that, the City Council adopted such an ordinance in late 2015.

The response to the new regulations was swift: A group backed by Uber and Lyft called Ridesharing Works for Austin gathered 65,000 signatures to force an election that would overturn the new ordinance. Called Proposition 1, or Prop 1, an election was set for that May.

Deals fall apart

Throughout the spring of 2016, then-Mayor Stephen Adler said he tried to broker a deal with Uber and Lyft by suggesting solutions.

Among them: the city fingerprinting Uber and Lyft drivers where they worked or lived for convenience sake; having the local tech community design a slider for the companies' apps indicating drivers who were fingerprinted; and crafting a "thumbs-up" seal of approval for drivers who had been fingerprinted. Adler even suggested a lottery with a Tesla as a prize to encourage drivers to get fingerprinted.

"We put together some pretty nifty, innovative ideas," he said. "They told us they would leave the city anyhow, which made no sense to us because we weren't asking them to do anything."

Adler is writing a book about his eight-year tenure as mayor that includes a chapter devoted to the Uber and Lyft rumpus. He said he wanted to show that "solutions can be worked out between new technologies and platforms in the sharing economy if companies are willing to work with the communities."

But Adler said he was repeatedly rebuffed by Uber and Lyft, which began to operate like the stodgy, change-resistant old-economy companies they routinely pilloried.

Prop 1 fatigue

As the Prop 1 campaign wore on, many Austin residents grew weary of the issue.

"You could not guess the number of ads that came from Uber and Lyft, they spent so much money, people just got annoyed," said Austin resident and former pedicab operator Chris Anderson. "Every day, you'd go out to your mailbox and there were 10 mailers in there. People got pissed."

Another coalition that supported fingerprinting, which included taxi companies and labor unions, sprouted up called "Our City. Our Safety. Our Choice." The group was co-founded by longtime Democratic political consultant David Butts, who contributed about $20,000 of his own money to the cause.

"It was an attempt by a corporation to run over a city," Butts said. "We weren't going to stand for it."

Uber and Lyft reportedly spent about $10 million on its campaign to overturn the fingerprinting ordinance, with the city shelling out less than $200,000.

Kitchen, the City Council member who led the fingerprinting effort, came under direct fire. Uber launched a service that featured horse and buggy rides in downtown Austin called "Kitchen's Uber." A flat fee of $50 was charged.

"Council Member Kitchen's plan would impose 19th-century regulations on 21st-century technology," an Uber spokesperson said.

"It was funny, except I didn't think it was funny at the time," Kitchen said last week. "It was just outrageous."

At the same time, there was a move to recall Kitchen. Uber and Lyft denied being a part of the recall effort — the political action committee leading the charge was traced to Republican operatives, according to the Austin American-Statesman. No recall election was ever held.

Prop 1 ultimately failed as well, as city voters overwhelmingly defeated Uber and Lyft's attempt to overturn fingerprinting by a 12-point margin.

In response, Uber and Lyft shut down service within two days in Austin.

Alternatives sought

With no ridesharing, diminished taxi service and minimal public transit, Austin was ripe for new transportation solutions, especially since thousands of former Uber and Lyft drivers were available for work.

Within months, a nonprofit rideshare company was formed by local tech entrepreneurs with city support called RideAustin, which permitted customers to round up their fares for local charities. Boston-based Fasten entered town, as well as several others.

Jeff Kirk, an Austin-based rideshare strategist, said about 14 rideshare apps surfaced at various times after Uber and Lyft departed. Service was often spotty. Ultimately all of them shut down, although new apps have cropped up more recently.

A big test came for the alternative ridesharing apps during the 2017 South by Southwest conference and festival, a magnet for thousands of celebrities, techies and creative thinkers. One rainy Saturday night at the height of the event, many of the apps crashed.

"It was completely impossible to get a ride, and all of the out-of-towners and journalists covered it," Kirk said. "There were a lot of pissed-off techies."

But Kirk said Minneapolis appears to have some promising rideshare players entering the market. "If there are alternatives that are actually working, I'm wondering if more and more cities will essentially do the same thing as Minneapolis. They could present a serious threat to Uber and Lyft and one that is long overdue."

Legislature enters fray

Most involved in the Prop 1 battle in Austin suspected the Republican-controlled Legislature would pass a bill that preempted local ridesharing ordinances — and that's exactly what happened.

"All Uber and Lyft had to do is drag some campaign contributions around the statehouse, [legislators] are like feral cats in heat when that happens," said Butts.

In response, Gold said, "Uber did not promise or make any campaign contributions to Texas state legislators." The company spent up to $1.6 million to hire 26 lobbyists during the preemption discussion at the legislature in 2017, according to the Texas Ethics Commission.

Lyft, which could not be reached for comment on this issue, spent up to $760,000 for 14 lobbyists at the time. Both companies also contributed a total of $30,500 to several legislative caucuses, and Lyft spent $10,000 split between the Texas Republican and Democratic parties.

As Republican Gov. Greg Abbott signed legislation in 2017 usurping local ridesharing regulations in more than 20 communities throughout the state, he declared, "This is freedom for every Texan."

Within hours, Uber's and Lyft's apps in Austin were turned back on, a move that was met with "joy and bitterness," according to the local newspaper.

When asked whether Uber and Lyft are bluffing in Minneapolis, Kitchen (and others) said they're not.

"But the thing about it is: Who cares? Our community did not suffer from them being gone," she said. "The community said no, they would not be bullied, and created RideAustin to take care of drivers and passengers.

"I was proud of our community for standing up to them."

RideAustin, which provided nearly 3 million rides, struggled after Uber and Lyft returned to Austin. Then the pandemic hit, and it closed up shop in 2020. It has open sourced its software platform so others may start their own ridesharing apps.