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New Austin Ridesharing Group Arcade City Might Be Able to Avoid Regulations Entirely

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Disruption is a flat circle

On May 9, Uber and Lyft stopped operating in Austin, following a ballot referendum in which voters overwhelmingly turned down a proposal that would have lifted city regulations the companies deemed onerous.

Most of the pre- and post-election analysis concurred that the majority of voters were less concerned about the safety such regulations theoretically bring and more interested in drawing a line. The message those voters sent was that that they would not easily allow corporations such as Uber and Lyft, who underwrote much of the approximately $9 million spent campaigning first to hold the referendum and then in favor of their position on it, to write their own laws and to buy or bully the city into passing them.

It seems at least a little ironic, then, that a company like Arcade City has jumped into the fray—and has an enthusiastic base of local support. Its peer-to-peer model, which claims to cut out the middleman in the rider-driver relationship so they can negotiate their own financial agreements, is far more market-centric and regulation-averse than even Uber and Lyft.

According to an article in Motherboard, a tech-blog "channel" in Vice Media's online arsenal, Arcade City operates on an system similar in technical structure to that used by Bitcoin. The company was formed in New Hampshire by former Uber driver Christopher David, who, according to Motherboard, has been accused of being a "startup grifter" by a former worker on David's 2012 campaign for Congress. (The two met at a "Ron Paul based volunteer organization," according to the accuser, Ivan Chen-O'Neill. You can read much more about all that here.)

Arcade City's goal, reports Motherboard, is to get rid of the gatekeeping functions of intermediaries between drivers and riders, which is how it characterizes most ride-hailing apps. David envisions developing an app with rating systems and community features, but right now the group is operating through Facebook. According to the Motherboard article, drivers and riders are currently encouraged to work out a fare in advance and handle payment themselves, but David says the app will eventually process payments.

As do most open-market advocates, David advocates for the relationship between customer and seller being as direct and as unimpeded by regulations and "middlemen" as possible. The company is already operating without requiring its drivers to comply with the city's controversial fingerprinting requirement (which gives companies until February 2017 to come into compliance); that, like many stateless transactions, will be left up to the terms of the customer-provider agreement.

Arcade City's public Facebook page (the local ridesharing group, which has 28,000 or so members, is private, and requires approval to join) quoted itself from a Reason magazine article yesterday: "Arcade City tells potential downloaders of its app, 'Our drivers are entrepreneurs, free to make their own choices about how they want to comply (or not) with government regulations. Some of our drivers want to get fingerprinted and comply with the Austin regulations. Some do not. We respect their choices.'"

Motherboard also reports that the city of Austin has deemed the operation legal, as long as long as the ride cost doesn’t exceed the federal reimbursement rate of 54 cents per mile. Still, on the same day the Motherboard article was published (May 26), local TV station KEYE reported that Arcade City drivers are already worried about police stings set up to find violators of that law. The report added that spokespeople have said that the city will enforce its code.

According to information pieced together from both of its Facebook pages, Arcade City's new Austin headquarters are open, it has already held two meetups, and the service is in operation. The similarly operated but much less ambitious Austin Underground Ridesharing Community is also up and running.

Meanwhile, the city is looking at removing some regulations on cab companies and has endorsed a taxi co-op; local tech leaders are working to form a ride-hailing nonprofit; and ride-sharing companies with more traditional models—including Fare, Fasten, Wingz, and GetMe—are currently in operation and are mobilizing drivers to get into compliance with local laws by the February deadline.

Arcade City Is the ‘Black Market’ Uber that Runs on Facebook [Motherboard via Reddit/A]

An American Fraudster : The Dirge of Christopher David, CEO of Arcade City [Medium]

Arcade City drivers concerned about possible future city stings [KEYE-TV]

After Winning Regulatory Battle Against Ride-Sharing Firms, Austin Turns to Black Market and Deregulation [Reason]