Home > Uncategorized > Unicorns and Zeros: Über’s Spending on Austin Ballot Measure Tops $8 million

Unicorns and Zeros: Über’s Spending on Austin Ballot Measure Tops $8 million

April 30, 2016

As you may know, Über and Lyft are spending unprecedented amounts of money to write their own regulations for the City of Austin.  The Austin-American Statesman reports that with a week or so to go before election day on May 7, the Über/Lyft PAC has now spent over $8 million–which includes hiring former Austin mayor Lee Leffingwell for $50,000.  Here’s the graphic from Austin Monitor:

chart-6-620x365

From Austin Monitor 

I would lay even odds that the final number will be closer to $15 million.  Just to give you a reference point, the most expensive political campaign in the history of the City of Austin was the most recent mayoral race where current Mayor Steve Adler spent $1.2 million which turned off a lot of Austinites.  Not enough to vote for his opponent, but it did.

So why are they doing this to us?  And why will they do it to you in your town?  As Jim Henson, director of the Texas Politics Project at the University of Texas told the Statesman:

“If this were just about Austin, it would seem like $7 million is a lot of money,” he added, “but they’re operating at a much bigger scale than Prop 1 in Austin.”  [The number evidently has gone up by $1 million since that interview.]

Uber Yardsigns

Uber is losing the yard sign audience

That’s exactly right.  Über–and it really is Über although Lyft is equally complicit from a branding point of view–is showing its very Googlely underbelly.  Because don’t forget, Über is a portfolio company of Google Ventures, one of the investment arms of Google.  That investment was $238 million at a defining moment in Über’s history.  $238 million is a strategic investment, not some Silicon Valley angel “spray and pray” investment strategy.

Also remember that Austin has the great gift of Google Fiber and Google has taken offices with over 200,000 square feet conveniently located near both City Hall and the Capitol.  So the Google connection is not in my imagination.  They have a conference room named after Willie Nelson which is like if the alien named her teeth after Sigourney Weaver.

So why are they doing this?  One reason might be Über’s role in Google’s driverless car strategy.  Is it a coincidence that right in the middle of Über’s campaign in Austin, Google just happen to announce the formation of an alliance with Ford, Volvo—and Über and Lyft?

That’s right—according to Reuters, Google, Ford, Volvo, Über, Lyft hired the Obama Administration revolving door lobbyist David L. Strickland to lead the federalization of their driverless car effort.  (Volvo is owned by owned by China’s Zhejiang Geely Holding Group Co.)

Strickland joins the coalition from the high roller Washington, DC lobby shop Venable where he’s worked since 2014 after leaving the post of –where else–Administrator of the National Highway Traffic Safety Administration (NHTSA) in the Obama Administration.

In a statement, Strickland said:

“The best path for this innovation is to have one clear set of federal standards, and the coalition will work with policymakers to find the right solutions that will facilitate the deployment of self-driving vehicles.”

Why would Google and Über want “one clear set of federal standards”?  And why would they want it right now?  And will they use the Austin ballot measure as evidence of the need to federalize the entire issue?

But wait a minute–I thought that Über and Lyft were all about the drivers–why would Über and Lyft be in a high level coalition to promote driverless cars?

Well…dude…it’s not my imagination.  Über CEO Travis Kalanick lets us in on the Über strategy, as reported by the Verge:

Über will eventually replace the people who drive its cars with cars that drive themselves, CEO Travis Kalanick said today at the Code Conference. A day after Google unveiled the prototype for its own driverless vehicle, Kalanick was visibly excited at the prospect of developing a fleet of driverless vehicles, which he said would make car ownership rare. [And which Uber would presumably buy from Google or a vendor like Ford or Volvo using Google’s technology.]

“The reason Über could be expensive is because you’re not just paying for the car — you’re paying for the other dude in the car [meaning the driver],” Kalanick said. “When there’s no other dude in the car, the cost of taking an Über anywhere becomes cheaper than owning a vehicle. So the magic there is, you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away.”

A more fundamental reason is that Über is implementing a monopoly strategy right before your eyes.  Many Silicon Valley entrepreneurs embrace Pay Pal founder Peter Thiel’s love of monopoly.  As Fortune writer Roger Parloff wrote in his book review of Thiel’s book Zero to One (a how to for startups):

[D]evaluing competition is a central theme of Thiel’s new book. He asserts that “capitalism and competition are opposites,” because “under perfect competition, all profits get competed away.” He exhorts entrepreneurs to seek out monopolies, concluding, “All happy companies are different: Each one earns a monopoly by solving a unique problem. All failed companies are the same: They failed to escape competition.”

Not surprisingly, Über is doing its best to spend their way to escaping competition in Austin and in many other cities.  It looks like Über may well have a monopoly on its market already.

Federalization would make cementing that monopoly so much easier.  (As we’ve seen with the FTC’s complete failure to prosecute Google for the same claims as Google is being prosecuted in Europe.)

But wait–there’s more.  It’s not my imagination–there’s a real chance that Über is going to be found liable for price fixing in its monopoly market.  According to The Guardian:

Travis Kalanick, the chief executive of Über, has failed to win the dismissal of an antitrust lawsuit accusing him of scheming to drive up prices for passengers who use the popular ride-hailing service.

District judge Jed Rakoff in Manhattan said on Thursday that Kalanick must face claims he conspired with drivers to ensure they charge prices set by an algorithm in the Über smartphone app to hail rides, including “surge pricing” during periods of peak demand.

Led by Spencer Meyer of Connecticut, passengers claimed that drivers conspired with Kalanick to charge fares set by the algorithm, with an understanding that other Über drivers would do the same, even if they might do better by acting on their own.

Rakoff said the plaintiffs “plausibly alleged a conspiracy” to fix prices in this manner, and could also pursue claims that Kalanick’s actions drove out rivals such as Sidecar, enabling Über to command 80% of mobile-app generated ride shares.

And 80% sure sounds like a monopoly to me.

As Professor Jonathan Taplin of the Annenberg Innovation Lab wrote in his post Capitalism vs. Competition:

[Peter Thiel and Sergey Brin and Mark Zuckerberg] like monopolies like Facebook and Google and they don’t want the government regulating them. It may very well be that certain types of digital firms are natural monopolies….As a society we are going to have to decide fairly soon whether Comcast, Google, Facebook and Amazon are some sort of natural monopoly that needs to be regulated or whether we are going to pretend that competition and capitalism can exist in harmony in the digital age. Peter Thiel knows that’s a fantasy, but do the regulators in Washington?

You can add Über to that list.  And Über is demonstrating in real time in Austin just how much raw monopoly power they can bring to bear when it counts.  That’s not a fantasy.

 

  1. regan615@comcast.net
    April 30, 2016 at 13:32

    Chris, I reposted this on my Facebook page….then when I looked for it on the news feed it was buried so far down I couldn’t find it. Adjusting my tinfoil hat now. Keep up the great work. Bob

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