Lyft and Uber are rich and powerful companies, but they don’t understand California or its direct democracy.
Witness their collective threat (along with DoorDash) to fund a $90 million ballot initiative to effectively reverse AB 5, legislation that could turn their drivers into employees.
Lyft and Uber made the threat before AB 5 is passed and signed with the goal of trying to stop it or slow it down. The logic is: threaten an initiative fight, and perhaps we can bend the bill more in in our favor.
That may sound like common sense, but Sacramento doesn’t run on common sense. Neither does the ballot initiative process.
Indeed, Lyft and Uber hurt their own interests with the threat. Raising the prospect of a big ballot initiative fight gives more momentum to AB 5, and the labor and trial lawyer interests behind it.
For one thing, the threat was easily turned against Lyft and Uber. If the companies have $90 million to spend on a state ballot initiative, why can’t they treat the people who work for them better?
A bigger problem with the threat is that Sacramento doesn’t fear costly initiative fights. It loves them
Interests in Sacramento find it hard to get much attention. But costly initiative fights do it. A $90 million ballot initiative campaign sounds like Christmas to Sacramento ears. All that money will create attention (and help my friend’s political consulting firm too). And the fact that the fight involves companies that are household names is even better
Labor unions sees such initiative campaigns as opportunities to organize and gain more power. They’d love an initiative battle like this. Gov. Newsom and other politicians are also more likely to jump on legislation when it leads to an initiative. It’s worth noting that Newsom publicly backed AB 5 almost immediately after the Uber and Lyft threat.
It’s harder to see what Uber and Lyft think they would accomplish with such a campaign. Even if their initiative won, they’d lose. For one thing, successful initiatives often pose unintended problems for their sponsors, given the complexity and unpredictability of how initiatives are enforced. Worse still, the ride share companies would be targets of future measures, and would have to spend hundreds of millions more on defense, just in California. If Uber and Lyft think they wouldn’t be repeatedly targeted by ballot initiatives, they might talk to the tobacco and pharmaceutical industries, which could set them straight.
Uber and Lyft, if they want to get their way, are much better off playing a quiet, inside game. They should make no lines in the sand. They should commit to long-term lobbying and the care and feeding of politicians. Look at what AT&T does—it’s an awful company with a horrible record of customer service (yes, I’m a former customer), but it plays the inside game well in Sacramento, and usually gets what it wants.