Uber and Lyft abandoned Austin, but it could be a blessing in disguise for ride-sharing apps

And then they were gone.
And then they were gone.
Image: Reuters/Lucy Nicholson/Files
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What Uber giveth, Uber can taketh away. On May 9, Uber and Lyft stopped operating in Austin, Texas, after spending over $10 million to lobby Austin’s citizens against a city ordinance that would require ride-sharing drivers to get background checks. Voters upheld the ordinance, and the two companies pulled out of the city two days later.

That put 10,000 drivers out of work, and thousands more people out of rides. But Austin’s community and other transportation network companies (TNCs) have quickly moved on. On May 23, a group of Austin citizens announced a new nonprofit ride-sharing company, RideAustin, which will start providing rides to citizens in June. The app is available to download, and drivers are already signing up with the service. Meanwhile, TNCs like GetMe, Wingz, and Fare have also started operating in the city as multiple upstart services jockey to fill an Uber-sized hole.

“We have a gap that we need to fill,” says Austin mayor Steve Adler. “We’re trying to help facilitate these drivers getting back to work as quickly as we can.”

It’s undoubtedly true that Uber and Lyft’s abrupt departure left a community heavily dependent on cars in the lurch. Austin, the 11th-largest city in the US, thus inadvertently became one of the largest open markets for ride-sharing companies in the country. In most US cities, Uber and Lyft dominate the ride-sharing market. Now that they’ve forced Austin to innovate, the city’s new ride-sharing model could one day cut into the Uber-Lyft monopoly in other cities as well.

RideAustin is the first example of this innovation in action. While GetMe, Wingz, and Fare use a ride-sharing model similar to Uber and Lyft, RideAustin is funded and operated by local Austin citizens. The company hopes that its local roots will help it to tailor the app to city residents’ specific needs.

“We wouldn’t be doing this if Uber and Lyft were still here. There’s a vacuum and we’re trying to fill that,” RideAustin’s director of community engagement Joe Deshotel says. “This is almost like a giant social experiment.”

As a nonprofit, the app will include a round-up option, so drivers can round the cost of their ride up to the next dollar and donate the difference to a variety of local charity partners. Deshotel says that without the pressure of investors, company revenue will be re-invested in Austin. They also hope to eventually find ways to work with underserved communities that might not have access to the app.

“Any other business would need to make a profit to be sustainable, and we don’t have to,” Deshotel said. “Our money that ends up being spent in this community will stay in this community.”

To fingerprint or not to fingerprint

RideAustin’s attitude towards background checks is a dramatic change from Uber and Lyft. The nonprofit is waiving the fee it costs drivers to get fingerprinted, making the controversial background-check process much easier. The issue had become a priority for Austin’s City Council after community members noticed an uptick in sexual assault incidents reported to the local sexual assault prevention nonprofit, SAFEAlliance.

In 2015 alone, 27 incidents of sexual assault or rape in Austin were reported where a driver of a ride-sharing service assaulted a passenger, according to data from the Austin Police Department. Meanwhile, only 9.2% of victims report sexual assault to the police in Texas, according to the 2015 Texas Statewide Sexual Assault Prevalence Study, and 68% of sexual assaults go unreported nationally. This means that while 27 incidents of sexual violence were reported, many more could have occurred undetected.

“The list of assaults is unacceptable for our city,” Austin District 5 City Council Member Ann Kitchen says. “If there’s something that we can do to make it a little safer, then we should do it.”

City council members, led by Kitchen, the chair of the Mobility committee, decided to make fingerprinted background checks a key part of its ride-hailing driver application process. Fingerprinted background checks are an established safety measure generally required by those working in schools and hospitals as well as real estate agents, veterinarians and funeral directors, to name just a few.

“You can never prevent all crime,” Kitchen said. “There is no way you can prevent all, but that doesn’t mean that you shouldn’t prevent what you can.”

Sexual assault incidents in particular are notoriously hard to prosecute. While these kinds of crimes are overwhelmingly underreported, the amount of cases where the perpetrator is actually convicted is even smaller. According to SAFEAlliance CEO Kelly White, fingerprint records are an invaluable aid both for the prosecution process and as a deterrent.

The TNC giants, however, disagree. They claim that fingerprinted background checks needlessly deter part-time drivers and believe that company-run background checks are a sufficient security measure. Right now, Uber only operates in two cities where fingerprinted background checks are mandatory: Houston and New York City. An Uber spokesperson told The New York Times that they plan to stay in New York City despite fingerprinting rules. But it’s unclear how long the company will stay in Houston. The company is clearly unhappy with the city’s policy, as indicated most recently by an ominous letter Uber sent to the Houston city council on April 27.

Whether or not city’s background checks are more effective than Uber and Lyft’s remains to be determined. Fingerprinted checks aren’t the most up-to-date technology, and they do require people to go through some bureaucratic hurdles to obtain them. There’s also some concern that the checks unfairly profile minorities. Despite these downsides, the 2014 Criminal Justice Information Services Division Report has classified them as 99.6% accurate. A representative from the Texas Dept of Public Safety told the city council back in October that they recommend fingerprinted checks over the ones run by the ride-hailing companies. The mayor and city council member Ann Kitchen confirmed this account to Quartz.

A silver innovation lining

During the fight between Austin’s city government and Uber and Lyft’s demands, Austin mayor Steve Adler proactively commissioned a task force to figure out a compromise. Their solution was an independent but voluntary validation system that would fingerprint drivers and riders: Thumbs Up.

“Thumbs Up was conceived as a part of a voluntary program. Uber and Lyft would stay in Austin, and drivers would not be required to be fingerprinted,” Josh Jones-Dilworth, Thumbs Up director says. “It has a modern user experience. It makes fingerprinting feel more Apple store and less criminal booking.”

Although the city’s suggestion was ultimately rejected by the city council, Thumbs Up has bigger implications for the sharing economy in Austin and across the country. In a world in which we trust strangers to give us rides, rent us apartments, or sell us various products through the internet, having a new digital badge that says, “Hey, I’m not a criminal,” could be extremely useful.

“We think a trusted identity is really important, even outside of TNCs,” Jones-Dilworth said. “We want to be the ultimate digital driver’s license.”

Thumbs Up is still in the prototype phase, but developers claim early testing cut the fingerprinting process down to four minutes. Ideally, the company would like to put booths around the city, in local grocery stores and other popular commercial locations, allowing participants to be fingerprinted via an iPad. Before they can move forward with development, however, the creators need the city to approve the service and will also need a stamp of official approval from the Texas Department of Public Safety.

“My sense is that Uber and Lyft are not sure whether or not they can be creative and innovative in a city like Austin, because they are in so many cities,” Adler said. “My hope is that Uber and Lyft come back to help us innovate together, because I think we can do it in a way that doesn’t come at a cost to their business model, but we certainly can’t force them to do that.”

Life after Lyft (and Uber)

Uber and Lyft’s departure left an immediate and visible hole. In a commuter-heavy city with infamous traffic problems, ground transportation options like ride-sharing are much more than a convenience. They’re practically a necessity.

After May 9, a worried city council quickly set up a driver’s hotline that former Uber and Lyft drivers could use to call in to find new work with other TNCs. Adler says that the Austin city council is also pursuing the expansion of other ground transportation options including more buses and taxis.

The city is willing to work with the new TNCs coming to town, and Adler is optimistic about the ideas RideAustin has proposed. (The city council is not funding or directly supporting any of the new TNC options.)

Of course, Uber and Lyft were not in fact asked to leave by the city. City council members tell Quartz they are open to both services returning—providing they abide by the city’s regulations.

“They are certainly welcome to operate here, and I think we would encourage that,” Adler said. “My belief is that we can come to a place that meets everybody’s needs, but, in the meantime, we’re going to keep moving forward.”