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Black Market Ride-Sharing Explodes In Austin After Voters Drive Out Uber And Lyft

Now that Uber and Lyft have pulled out of Austin due to onerous new city regulations, drivers and riders are turning to black market ride-sharing.


AUSTIN — Almost as soon as Uber and Lyft pulled out of Austin two weeks ago, a black market for unregulated ride-sharing emerged to meet the huge demand for transportation here.

Tens of thousands of riders and drivers are now connecting through Facebook and Craigslist, sidestepping onerous city regulations passed late last year aimed at traditional ride-sharing companies like Uber and Lyft that required drivers to be fingerprinted, among other things.

When a ballot proposal that would have replaced the city ordinance failed, Uber and Lyft left town as promised. Since May 9, there have been no ride-sharing services available in this city of almost a million people. Getting around town has become almost impossible unless you own a car.

Riders And Drivers Connect On Their Own

So it’s no surprise that tech-savvy Austinites have taken matters into their own hands.

One tech company, New Hampshire-based Arcade City, is helping to facilitate this new black market on its Facebook page, with a closed group of would-be riders and drivers. The group now has more than 24,000 members.

Arcade City, the “Uber killer” ride-sharing company, as it’s known, says it’s developing a peer-to-peer ride-sharing app that will connect people who need a ride with people who have a car, and eliminate “concern about red tape or corporate BS—just people providing people a needed service.”

Here’s the big idea: We can cut out the corporate middlemen — and make government regulations obsolete — by transparently providing rider and driver with clear information about the other party to each transaction, including a strong reputation and ratings system where riders and drivers ‘level up’ after community-vetted good behavior on the platform.

For its part, the City of Austin hilariously told one local news outlet that Arcade City “is legal as long as drivers do not charge beyond the federal reimbursement rate of $0.54 per mile.”

Of course, there’s no way the city can enforce what riders and drivers privately agree to for payment.

The City Of Austin Is Embarrassing Itself

Now that Uber and Lyft are gone, Austin—generally thought to be a tech-savvy city—has instead put itself on the map for its ham-fisted governance. The city’s response is only making things worse. Last week it held a job fair for out-of-work Uber and Lyft drivers, at which it encouraged drivers to get fingerprinted and sign up for the only remaining ridesharing company in town, a local app called Get Me.

The city used taxpayer dollars to promote the one private ridesharing company that chose to comply with its onerous regulations.

In other words, the city used taxpayer dollars to promote the one private ridesharing company that chose to comply with its onerous regulations.

If that weren’t absurd enough, the city’s transportation department recently floated the idea of deregulating the local taxi cab industry to “level the playing field” with ridesharing companies. Austin Mayor Steve Adler even imagines a “third-party, cross-platform validator badge” the city could use to regulate everything from ridesharing to Craigslist transactions in the city.

In a moment of un-ironic cluelessness, Adler told The Atlantic’s City Lab: “My sense is we were innovating too quickly for Uber and Lyft. You get to be a big company, you’re less nimble. But these companies have to expect disruption.”

Adler gets it exactly backwards: city regulators and their government-backed taxi cab cartel are the ones who should have expected disruption—and a thriving black market—when they tried to shut down ridesharing in Austin.