Coming Soon To Your City: Uber and Lyft Bring Silicon Valley Style Hardball Politics to Austin
Americans are freedom loving people and nothing says freedom like getting away with it.
from Long Long Time by Guy Forsyth.
The list of outsider big money special interests that fared poorly after running into local Austin resident groups with staying power and grassroots clout is long and distinguished.
Even so, the radical change in Austin’s skyline bear mute witness to just how futile is resistance against determined multinationals. If you’ve ever experienced a Google Fiber rep trying to force his way into your back yard, you know what I’m talking about.
Uber and Lyft are using surge pricing of political influence to run headlong into this conflict as the brogrammers pour millions into a ballot measure to rewrite local laws to their benefit and finance the brinksmanship between the commoditizer and the commoditized that we are all too accustomed to.
But for once local elected officials are for the most part standing up to the well-funded outsiders. (This story is of particular interest to cities where Google has put down stakes with Google Fiber–Uber is a major investment for Google Ventures and is rumored to be the future of Google’s driverless cars.)
Trust me–at the rate these companies are going, it’s only a matter of time until it happens to your city if it hasn’t already. And that’s the real point of the story–it’s not just about whether you are pro or anti Uber.
The story is about whether you are concerned about how representative government survives the onslaught of corporate interests that will devote millions upon millions of dollars of the stockholders’ money to get their way because getting their way in the rigged economy is more important than anything–including brand damage. It should come as no surprise that Uber’s campaign is being run by slick political operatives from Washington who are here to help.
They’re here to help use Austin as a signal to anyone who gets in their way in any other city. Like your city, for example.
It’s a long read, but I promise there’s…er…a payoff. Or in this case, a punchline.
Austin’s Uber Experience
There’s really two issues. First, Mayor Steve Adler and the Austin City Council have passed regulations–after considerable debate and revising–that require Uber and Lyft drivers to undergo fingerprinting. As the local politics paper Austin Monitor reports:
Austinites will be asked to vote on Prop 1 during the May 7 election. A vote in favor of the measure would reinstate the ride-hailing ordinance passed in 2014, after a petition drive put those regulations on the ballot. A vote against the measure would allow the regulations approved by Council in December to rule ride-hailing in the city. Most of the debate between the two options has centered on background checks – Prop 1 would not require fingerprinting of drivers, and the recently approved regulations ultimately would. But those against Prop 1 warn that there is much more at stake.
Uber Drops $2,000,000 to Write Their Own Law
And that leads to the second issue, which is rapidly becoming the only issue thanks to the endless piles of uber-libertarian money that Uber and Lyft are pouring into the campaign for their own benefit.
Uber and Lyft have already dropped $2,000,0000 into the ballot measure to assure its success according to campaign records as reported by NPR affiliate and local success story KUT:
Ride-hailing companies Uber and Lyft have spent nearly $2.2 million so far this year [i.e., during the first quarter of 2016 alone] to fund a campaign to collect petition signatures to get an initiative on the ballot in Austin and advocate for that measure.
The ballot measure would institute a set of regulations, written by Uber and Lyft, that largely mirror rules passed by a previous Austin City Council, which include requiring name-based background checks. It would roll back new regulations passed in December by the current council, which require fingerprint-based background checks for the companies’ drivers, among other things. Those rules are essentially on hold, pending the outcome of the May 7 election.
The political action committee advocating for passage of the ballot measure, Ridesharing Works for Austin, was among the groups that filed required campaign finance paperwork with the Austin City Clerk Thursday. The PAC’s filing showed the companies at the center of the measure pouring large amounts of money in the campaign….
Is anyone fighting back? Of course, but the locals have raised only 0.006% of Uber’s war chest. Sounds like a Pandora songwriter royalty or something.
The filings paint a picture of an opposition woefully outgunned.
The main group organized to oppose the ballot measure, Our City, Our Safety, Our Choice PAC, filed paperwork showing $12,458.95 in contributions between February 26, when the PAC was created, and March 28.
As is fairly well known, Uber have hired former Obama campaign manager David Plouffe to run their lobby shop, so it’s not surprising that the biggest expense from the Uber/Lyft PAC is hiring the Washington, DC based petition mill “Block by Block”.
So here’s how that’s working out:
It’s Not Personal, Brah! Did Uber Launch A Secret Recall Campaign Against Austin City Council Member Ann Kitchen?
Not only have the Silicon Valley companies dropped big bucks on going around the Austin City Council–solely to benefit their own commercial interests–a mysteriously coincidental recall campaign called Austin4All (about which little is known but has all the earmarks of the Koch Brothers–more to come on that) launched lawfare against Austin City Council Member Ann Kitchen who opposed Uber and Lyft according to Community Impact:
Local political action committee Austin4All submitted a recall petition to the city of Austin Office of the City Clerk on Feb. 18. The petition stated Kitchen “has purposefully hurt businesses that employ citizens of Austin.”
The petition had enough signatures and the statement, but the affidavit did not meet city requirements, according to a March 4 memo from City Clerk Jannette Goodall to the mayor and council.
Austin4All Co-Director Rachel Kania said the PAC plans to contest the petition rejection in court.
The way the recall effort was conducted subverted the 10-1 City Council system, Kitchen said.
“You’ve got large amounts of money coming in from outside the district [for the PAC], which is a concern to a district’s ability to elect their own individual,” Kitchen said.
Of course, none of this should come as a surprise to anyone who has followed the career of Uber CEO Travis Kalanick from the file-sharing king of Southern California with the bankrupted Scour pirate site to the ride-sharing King of The World with Uber. According to Re/Code:
Kalanick vowed that Uber would use the giant war chest to…fight a hard-nosed public relations battle with the “asshole” taxi industry.
Kalanick’s supporters will tell you that there’s no proof that Uber is behind the recall, but maybe that’s kind of the point. And whether it turns out in the end that Uber is behind it–and these things always come out eventually–the message is clear. And would that message have been given if Uber hadn’t poured the stockholder’s money into Austin in the first place?
The Inspiration of Citizens United
Neither should it come as a surprise that Uber’s $50 billion valuation tactics in Austin are becoming a model for the tech industry, according to the leading Silicon Valley news site TechCrunch.
Although TechCrunch conveniently omits the overwhelming disparity in funding between Uber/Lyft PAC and locals, it does show you how these outsider tactics fit Silicon Valley like the proverbial glove as TechCrunch offers up bully boy corporate political tactics in Austin as inspiration for best practices in all state and local relations:
The most recent political campaigns showed politicians the importance of having an online expertise, and the knowledge has resulted in some cross-pollution. Even more recently, tech companies have opened their wallets to hire the boldface names of the DC world, like [Uber’s hire of] Barack Obama’s former campaign manager.
Despite these recent efforts, tech is clearly still punching well below its weight in the political arena. Much of the real-world fight in politics is on the state and local level, where tech has not bothered to get involved. But a current battle in Austin, Texas against ridesharing companies may show the way that tech can really be involved in [local] politics.
In other words, greed is good.
Let’s get it straight folks–if we allow this to happen, they will be back. And it won’t be just them. Remember when Camel used to send brand ambassadors around to bars pushing cigarettes?
It could all come back as TechCrunch glowingly points out how tech should model itself after the gambling lobby:
[S]upporters of the companies have launched two seemingly successful petition campaigns. One is quite straightforward -– it put on the ballot an initiative that would repeal the background-check requirement. Uber and Lyft donated in the neighborhood of $30,000 [plus or minus $2,000,000] to get signatures for this effort; they needed 19,965 and got more than 25,000. The vote will be held on May 7 and could easily result in a complete win for the companies.
Industries have long used the initiative process to try to pass favorable laws. The Initiative and Referendum Institute at the University of Southern California notes that the alcohol industry tried to use initiatives to strike down prohibition laws, and chiropractors needed initiatives to be allowed to practice in some states.
Over the years, the gambling lobby has been extremely active throughout the country in using initiatives and other ballot measures to expand it legalization.
But wait…there’s more:
The initiative is one side of the political coin. The other, also being used in Austin, is a recall. Ridesharing supporters handed in close to 53,000 signatures needed to recall one of the bill’s sponsors, Austin councilwoman Ann Kitchen. The signatures were rejected on a technicality (the petitioners didn’t have each page notarized), but they may appeal — and the sheer number of signatures collected suggests that they have good reason to try again.
It is not clear who is leading the recall effort and who is paying for it. Reporters’ attempts to contact the leaders have shown an effort to conceal the supporters, though we have seen that Austin-based Trilogy Software’s CEO has given $20,000 for the recall. It is telling that proponents of the ridesharing services, including drivers themselves, have sought the power of the recall to punish members of the council and ward off future actions.
If TechCrunch seems just tone deaf, that’s unfortunately not unusual. As Uber CEO Travis Kalanick told GQ:
[T]he way he talks now—which is large—he’s surely making up for lost time. When I tease him about his skyrocketing desirability, he deflects with a wisecrack about women on demand: Yeah, we call that Boob-er.
And Then There’s the Whole Independent Contractor Thing
Uber designates their drivers as independent contractors for labor law and tax purposes. This chart shows all the employee benefits Uber doesn’t pay for by pushing these costs down onto the drivers:
Miriam Cherry, a St. Louis University law professor who has long followed the sharing economy, says Uber’s current business model is one part technology company and one part labor law workaround. The question is which part is bigger.
And don’t let Uber sing you the Pandora and Spotify song–instead of paying fair royalties, this time it’s labor costs would keep Uber from bring profitable. Just like Pandora and Spotify, it’s not only not fair, it’s not true, either.
Uber isn’t profitable because it employs a Dot Bomb era strategy of “get big fast” for which the capital markets reward them. Uber takes this savings for executive salaries and other overhead, then pushes down onto its drivers these costs normally paid by any company operating in the modern economy, at least paying into the workers compensation pool, unemployment, Social Security and Medicare.
You know–payroll taxes.
According to Gawker:
Uber, Silicon Valley’s prized amoral unicorn, is presumed to be a financial titan and a sure-thing IPO in the near future. Which may be true. But one thing that’s frequently missing from the conversation about its inevitable dominance over virtually every facet of our lives is the answer to a fundamental question: Does it make money? According to internal financial documents obtained by Gawker, the answer is a resounding no.
A Seattle Snapshot: Uber campaign’s illegal postering: “Uber turns on the marketing engines to pressure Seattle”
A Dehli Snapshot: Dehli bans Uber’s hallmark “surge pricing”
Austin’s Move Toward Democracy and the Coincidental Recall
This may all be a little easier to understand when you realize that the rules that Kalanick wants to impose on the city through the PACs and City Council recalls lionized by TechCrunch are against a City Council that was recently elected in a populist shakeup of city politics at least partly designed to counter just this kind of thing. Under the “old” Austin city council that gave Uber what it wanted, there were no city council districts, each Member ran “at large”. That changed a couple years ago in the “new” Austin “10-1” system where there are 10 council districts electing Members plus the mayor effectively running at large.
Because of this techtonic shift in the Austin city government that brought an historic female majority to the City Council, saying you want the “old” regulation for Uber and Lyft is like saying you want the rules from the bad old days. Saying you want the new rules acknowledges that things have changed in Austin and the back room deals are much harder to pull off to the great frustration of special interests like Uber and Lyft.
But Uber (probably through David Plouffe who knows a thing or five about distancing your client from PACs doing the real dirty) disavows any connection to the recall according to the Austin Chronicle:
Austin4All Co-Director Rachel Kania told the Austin American-Statesman that the rejection of the petition is “totally politically motivated” and that Austin4All plans to challenge the ruling in court. If that doesn’t work, they plan to work on a second petition.
Uber – which along with fellow TNC behemoth Lyft, has been suspected of having a hand in the recall effort – has disavowed both its involvement and the recall itself. A statement issued by the company said, “Although we disagree with Councilwoman Kitchen on how to regulate ridesharing, we respect her as a public servant and wish to work alongside her into the future. The Mayor and City Council, including Councilmember Kitchen, are working hard to make Austin a better place to live.”
Pass the apple pie, please.
This is one of the reasons why the recall effort against Council Member Ann Kitchen failed but seemed an attractive approach for corporate interests to pour money into a little Austin city council district to get rid of a public official who was being difficult. This should have been a layup for the Washington hacks who could bring their petition mills and marketing campaigns into a district with the population of a few square blocks of San Francisco real estate, but it failed. Not surprising if you know Austinites.
But where this ends up is really important. As TechCrunch tells us rather blithely:
The fact that the Austin lawmakers felt they could take action against ridesharing harkens back to the weaknesses that tech companies have faced in dealing with political bodies. But the actions of Uber, Lyft and various supporters to repeal the law and remove at least one official shows that this may be the start of a new day for tech companies in the political world.
It may be a new day–of city level economic development directors giving these litigious types a wide berth.
A New Way of Getting Away with It
This is what former Austin City Council Member and Mayoral candidate Laura Morrison meant when she told a League of Women Voters meeting:
“This is not an election about whether or not you like Uber and Lyft,” Morrison said. “This is an election about two main issues. The first main issue is: Who is going to run this city?”
And if we don’t vote, we get the democracy we deserve.
Enter the Competition: Chariots for Women
On a brighter note, the market seems to already be producing an alternative with drivers who don’t fear getting fingerprinted. Chariot for Women is a new ride sharing service with the slogan “Driving Women Toward Empowerment and Safety”. Again according to a different TechCrunch story (maybe those folks should talk to each other):
“The premise is the same as all the other ridesharing services,” Pelletz said in a phone interview. “There’s a driver app and a client app, except that what makes us unique is our safety feature that other apps forgot to do.” The service’s patent-pending technology gives the driver and the client a code in the app after a ride request has been made. When the car arrives, the driver and passenger make sure their codes match before the passenger gets in the car. Chariot for Women donates 2 percent of every fare to charity, and the company does not use surge charging.
In addition to only having women as drivers, Pelletz uses Safer Places, which has a reputation for performing the most stringent background checks. Chariot for Women also requires that all drivers pass Massachusetts’ Criminal Offender Record Information (CORI) check, the same deep background check used in daycare centers and schools. Chariot for Women pays for the CORI check and will add fingerprinting for its drivers as soon as it’s possible.
The service will also pick up kids of any gender under age 13, as well as anyone of any age who identifies as a woman. “If they’re trans and identify as a woman, they can drive and ride with us, no problem at all,” Pelletz said.
There are likely legal difficulties ahead for a service that states outright that it will not serve men. That doesn’t worry Pelletz. “We look forward to legal challenges. We want to show there’s inequality in safety in our industry. We hope to go to the U.S. Supreme Court to say that if there’s safety involved, there’s nothing wrong with providing a service for women.”
I wonder if Mr. Kalanick’s many lawyers are drafting as you read this to prepare for the lawfare to come against Chariots for Women.
A Cautionary Tale
This is not just a sad chapter in the civic life of Austin. It will be a sad day in your city, too–and given Uber’s global aspirations and actual expansion that could be any city in the world. The tactics are designed to strike fear in the hearts of anyone who opposes them.
And it may be working. We’ll see on May 7.