10 November 2020

Vice: “Proposition 22’s Victory shows how Uber and Lyft break Democracy”

Of the $203 million spent by the Yes on Prop 22 campaign, some $57 million was contributed by Uber and another $49 million by Lyft. By Wednesday morning, news of the results had rapidly increased the ride-hail companies shares prices and valuations by tens of billions of dollars in premarket trading. Uber saw a return on its spending of nearly 19,300 percent, while Lyft saw a more modest return of around 3,670 percent.

The methods through which this was achieved were, in a word, dirty. Yes on Prop 22 spent millions on misleading “progressive” voting guide mailers, sent out chief executives on media tours, and paid $85,000 to a firm run by the leader of California’s NAACP chapter in a bid to paint themselves as champions of racial justice. The campaign made misleading claims about wages and worker flexibility, and Uber and Lyft weaponized their popular apps to push Yes on Prop 22 propaganda to customers and drivers alike.

To recap: corporations with some of the most exploitative labor practices in existence wrote a law to crush labor, spent hundreds of millions of dollars to create propaganda to convince (or, failing that, mislead) voters, won, and saw massive returns on their spending as stock prices rose. This sort of flagrantly anti-democratic behavior is normal for corporations in America, where they are empowered to write their own laws and buy support for them among the public.

Edward Ongweso Jr

I am certainly no expert in American legislation, but this outcome sets a dangerous precedent for future regulation of tech companies. California’s Proposition 22 overturns both a 2018 State Supreme Court ruling and a 2019 state law that would require gig economy companies to employ drivers and pay for health care, unemployment insurance and other benefits. Instead of abiding by the law, a group of companies decided to fight it by aggressively campaigning for Proposition 22 through messages in their respective apps – and they were very much successful! A direct lobbying effort for direct democracy. While some Uber drivers filed a class action lawsuit against this unlawful pressure, I doubt it will make much difference now that the measure passed the vote.

Drivers and other gig workers urging voters to reject California’s Proposition 22 outside Uber’s headquarters
Drivers and other gig workers urging voters to reject California’s Proposition 22 outside Uber’s headquarters in San Francisco last month. Jim Wilson/The New York Times

This is a terrible measure socially – a large majority voting to strip labor rights from a minority in order to keep their privileges (in this case cheaper rides) – and economically, as it further empowers tech companies to ignore regulations, to shape laws according to their interests, and erodes fair competition, because Uber, Lyft and DoorDash maintained their labor cost advantage over other companies. Remarkably, Uber and Lyft continue to be unprofitable, which explains why they fought so hard to have this exception passed: without it, their unsustainable business model would have crumbled even faster. This victory in California could encourage ride hailing companies to employ the same digital pressure tactics against legislation projects in other states or at the national level.

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