As various cities around the U.S. struggle with how to define and regulate transportation network companies that offer ridesharing, at least one company is paving the way for a regulation-free ridesharing experience.
In the last four years transportation network companies (TNC) have created an entire new market for ridesharing. By identifying a demand in the market (people want rides at a low cost) and a weakness in the existing transportation market (taxis are overpriced and not always easily accessible), companies like Uber and Lyft have been able to revolutionize the way we catch rides and, in the process, create businesses valued in the millions.
Not everyone has been happy with the ridesharing evolution, however. In cities around the U.S. voters and city council members have voted to restrict or regulate TNCs. Occasionally, the details are not too restrictive and business continues as usual. Sometimes, though, Uber and Lyft put up a fight and express their disdain for the new regulations, going as far as vacating a city once the new laws are put into effect.
That’s exactly what happened in Austin, Texas. In early May, Austin voters said no to Proposition 1 which would have removed a previous ordinance passed by the Council that required TNCs to submit to fingerprint background checks, already a requirement for taxis in the city. Proposition 1 not only would have removed the fingerprint regulation, but would “prohibit required fingerprinting, repeal the requirement to identify the vehicles with a distinctive emblem” and “repeal the prohibition against loading and unloading passengers in a travel lane.
After Prop 1 failed, Uber and Lyft kept their promise to leave the city and an estimated 10,000 drivers were left out of work. The companies have also vacated other Texas cities in response to regulation, including Galveston, Corpus Christi and Midland. In response to the failure of Prop 1, Texas State Rep, Jason Isaac recently asked the Federal Trade Commission to investigate Austin’s ridesharing rules. Isaac told The Texas Tribune that he believes the ordinance was “anti-competitive in nature.”
This vacancy in the ridesharing market has been filled by drivers who are willing to operate illegally through social media platforms and newly developing apps such as the neighborhood social network Next Door. One of the operations willing to wade in the waters of illegal ridesharing is known as Arcade City.
Arcade City was started by Christopher David, an activist and former Uber driver, as a Facebook page on New Year’s Eve in Portsmouth, New Hampshire. Although an app is in the early stages of development and testing, the majority of Arcade City’s business is conducted via Facebook groups. Essentially, riders post their destination and a driver responds. The rest of the details (cost per mile, type of payment, etc) are completely up to the driver and rider, no middle man involved.
This means that drivers can set their own rates, accept cash, or alternative payments like Bitcoin, and generally, have more control over the way they provide rides. Riders also have more control. In the “Arcade City Austin / Request A Ride” Facebook group, riders are asked to “post your ride request in this group. Using the #needarideatx hashtag may help it be seen faster.” Riders can also request to see the driver’s Uber or Lyft profile if they are a former driver.
“We are going to get really cemented here,” Arcade City CEO and founder Christopher David told Austin Inno. “Whoever wins the battle for Austin is going to be the next big ride-sharing organization.”
David also says that he hopes to integrate the Ethereum blockchain technology into the platform to avoid fraud. Although Arcade City will take a 10 percent cut of payments made through the app, there are no plans to end the Facebook page or groups. This will allow riders and drivers to continue to operate within the decentralized, peer-to-peer framework for payment and ride negotiations. Arcade City also has plans to launch “Arcade Tokin,” an internal currency that will allow payment without credit card fees.
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As far as keeping drivers and riders secure, the system operates on a reputation-based system. Not only are drivers encouraged to post their Uber and Lyft profiles, but many drivers will also post their insurance information, driver’s license photo, and other relevant information designed to make both parties feel more secure.
“Whenever you bring in the element of human choice, there will always be some level of risk,” David told Austin Inno. “We want to build a culture of safety and looking out for each other, but Arcade City is not your daddy. We don’t claim it is appropriate for every person, but we are obviously doing something right.”
So how exactly is the city of Austin handling such attempts at free exchange and enterprise? The only way a State institution knows how: attempting to shut it down. That’s right, Austin voters decided they wanted the TNCs to play along with the same rules as the inefficient taxis; and in the eyes of city law enforcement, groups like Arcade City are violating the law. In an attempt to stop free people from exchanging rides, the city of Austin is conducting undercover sting operations to catch drivers offering rides without the “appropriate documentation.”
One driver reported that she picked mistakenly picked up two undercover riders who wrote her a ticket and impounded her vehicle. The city said in a statement that “companies and individuals providing transportation services and charging more than the federal reimbursement rate without appropriate documentation are illegal in the City of Austin.”
Arcade City is already working on developing a verification system that could help other drivers and users vouch for each other. Hopefully this will prevent “unverified” Austin police officers from using the app and stealing vehicles from innocent drivers.
While some may be critical of companies like Arcade City for flouting the regulations and rules of the city of Austin, I happen to think this sort of revolutionary thinking is exactly what we need. When Uber and Lyft first arrived on the scene many people hailed them as the decentralized solution to ridesharing. Over time the companies have become less friendly to drivers, and more centralized and controlled. Part of this is due, of course, to city regulations that create barriers to entry and serve to support the monopolies maintained by taxis companies. Even without the city regulations, Uber and Lyft were essentially useless to someone like me who eschews smartphones, bank accounts, credit cards – all items which are necessary to use the ridesharing apps.
Arcade City now allows someone like me to go to a Facebook group for my city and seek out a driver who I feel comfortable with and arrange for a ride in the currency of our choosing. That is freedom. That is power. It is also perfectly in line with a strategy known as Agorism which I have discussed extensively (also see video below). Briefly, Agorism encourages individuals to engage in “counter-economics” by way of black and gray markets. Where taxis are taxed and regulated in the legal “white market,” rides from Arcade City are technically illegal because they are being performed without the proper licenses. This is what is considered black or gray market activity.
The idea is that the more people who intentionally vacate the State’s economy and redirect their resources to the unregulated and untaxed counter-economy, the more power in the hands of the people and less in the hands of the State. Arcade City serves as a great reminder of the usefulness of this strategy and the threat it poses to centralized institutions.
This situation is also a powerful reflection of the true capabilities and ingenuity of humanity. Without the State to restrict and control our free hearts and minds, we will flourish.
Derrick is available for interviews.
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