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Austin’s Uber Exodus Sparks Surge In Black Market Ride-Sharing

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Guy Bentley Research Associate, Reason Foundation
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Uber and Lyft’s decision to abandon Austin after it introduced new regulations has sparked a booming black market for ride-sharing.

Both companies ceased operations May 9 after the city voted against proposition one. Proposition one would’ve allowed ride-sharing companies to keep using their own background checks for drivers rather than comply with Austin’s regulations, which included collecting fingerprints.

Austin’s reputation as a tech hub and a quality tourist destination has since taken a blow, with tourists and residents alike complaining about the difficulties of getting a ride in the city. There are just 915 taxis to service a city of one million and a fluctuating number of tourists.

After Uber and Lyft decided to leave town, riders and drivers took to Facebook and Craigslist to get around Austin’s ridesharing rules. The Facebook group “Austin Underground Rides” has already notched up more than 6,000 members, The Federalist reports.

Tech company Arcade City is taking advantage of the situation using a Facebook page to connect riders and drivers. The company says it’s going to develop an app with a “ratings system where riders and drivers ‘level up’ after community-vetted good behavior on the platform.” The Facebook group has close to 25,000 members.

“Austin residents, similar to millions of other people around the globe, are hooked on ridesharing. The exit of Uber and Lyft does not change this,” Jared Meyer, a fellow at the Manhattan Institute, told The Daily Caller News Foundation. “Whether they are new or lifelong residents, regressing to a time when there were only a set number of taxis to service the city is not an option.”

Meyer says the rise of a black market is a damning indictment of Austin’s regulatory overreach. “Without the major ridesharing companies, people are battling through the inefficiencies that come with private ridesharing Facebook groups or other ‘black market’ alternatives. This is a complete condemnation of the city’s taxi system–which people must see as even more inefficient.

“Austin needs to roll back it’s completely unnecessary fingerprint background check requirements. There is no question that, by forcing out Uber and Lyft, its reputation as a ‘tech capital’ has already taken a hit. At least Austin’s residents are tech-savvy enough to once again work around zealous regulators–just as Uber and Lyft did a few years ago.”

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