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 And last month, Uber said it would leave Houston if similar rules—enacted in August 2014—weren’t repealed.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 … Next Page »

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Angela Shah is the editor of Xconomy Texas. She can be reached at ashah@xconomy.com or (214) 793-5763. Follow @angelashah

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