Last year, we wrote about two key “corruption indicators” in city and state governments: they ban direct sales models to block Tesla from competing with traditional car companies and they ban Uber/Lyft style car hailing services to protect local taxi incumbents.
It appears that Texas is really trying to wave its anti-innovation flag as strongly as possible as the legislature down there failed to move forward on two key bills that would have made it possible for Tesla to do direct sales in Texas… and to stop local cities from blocking Uber & Lyft to favor taxi incumbents.
A Texas House deadline has come and gone, killing many top-priority bills for both parties — among them one that would allow Tesla-backed direct car sales and another to regulate ride-hailing companies. Midnight Thursday was the last chance for House bills to win initial, full-chamber approval. Since any proposal can be tacked onto other bills as amendments, no measure is completely dead until the legislative session ends June 1. But even with such resurrections, actually becoming state law now gets far tougher.
<br . Regulations for ride-sharing companies passed out of committee, but never reached the House floor, despite strong lobbying efforts that cost both the taxi industry and companies such as Uber and Lyft up to a total of $1 million.
And, of course, this comes just after the FTC warned Michigan for its blocking of direct sales of cars like Tesla.
The failure to allow direct sales is a much bigger deal than the car hailing stuff, but both are bad. And the response from Texas politicians is really quite disgusting:
Rep. Senfronia Thompson — one of the House’s most senior members currently serving her 20th term — said it was the company’s own fault that the bill didn’t pass.
“I can appreciate Tesla wanting to sell cars, but I think it would have been wiser if Mr. Tesla had sat down with the car dealers first,” she said.
Really? In what world is it considered appropriate to force an innovative company that wants to go direct to consumers to first “sit down” with the gatekeepers that are trying to block them? “I can appreciate Amazon wanting to sell books to people, but I think it would have been wiser if Mr. Amazon had sat down with retail store builders first.” “I can appreciate YouTube wanting to let anyone upload videos, but I think it would have been wiser if Mr. YouTube had sat down with TV producers first.”
That’s not how innovation works. At all. And thus, we can cross Texas off the list of innovative states.
The law around car hailing is not quite as big of a deal, but without the new Texas law, various cities within Texas can still create their own rules that would effectively make it impossible for such services to operate there. There are states that create spaces for innovation — and then there are those that protect incumbents. Texas appears to be making it clear that it’s the latter. If I were a startup in Austin, I might consider finding somewhere else to operate.