AUSTIN, Texas (Reuters) - On-demand ride companies Uber and Lyft suffered an embarrassing defeat in a Saturday election in Austin as voters backed a measure requiring fingerprint background checks for drivers. 
 
 Campaign signs concerning a municipal vote over fingerprint requirements for ride-hailing companies such as Uber and Lyft are seen along a roadway in Austin, Texas, May 6, 2016. REUTERS/Jon Herskovitz 
 
 The two companies spent more than $8 million to repeal a city ordinance requiring the fingerprint-based criminal checks and launched what turned into the most expensive race in the Texas capital’s history. Voters said by a margin of 56 to 44 percent they wanted the fingerprint checks to stay. 
 
 The companies outspent their opponents by 80-to-1 and when the votes were tallied their campaign contributions broke down to being more than $200 for each vote in favor of their position. 
 
 “Disappointment does not begin to describe how we feel about shutting down operations in Austin,” Uber’s Austin general manager Chris Nakutis said in a statement. 
 
 The stakes were high for the privately held Uber [UBER.UL] and Lyft, which say their background checks are already rigorous and ensure safety. 
 
 “Unfortunately, the rules passed by City Council don’t allow true ridesharing to operate,” Lyft said, adding it will suspend operations in Austin as of Monday. 
 
 The loss could prod other cities to require fingerprint criminal background checks, encouraged that they can survive a bruising electoral battle with the ride-hailing services, analysts said. 
 
 The costly municipal election in Austin came as other cities consider imposing fingerprint-based background checks on drivers. The Austin election marked the first time a major U.S. city put the regulations to a vote, which happened after a petition drive by Ridesharing Works for Austin, the political action group underwritten by Uber and Lyft. 
 
 Residents were asked to decide whether a transportation ordinance passed by the City Council in December should be repealed and replaced with one backed by the on-demand ride companies. 
 
 The city ordinance calls for all ride-hailing service drivers to have fingerprint-based criminal background checks, while the ride-hailing companies backed one that does not. 
 
 The group supporting mandated fingerprinting said the heavy spending was a signal that the Uber and Lyft campaign was motivated more by corporate profits than passenger safety. 
 
 Other places battling over fingerprints include Atlanta and Houston, which along with New York is one of the two major U.S. cities where Uber operates even though its drivers are required to undergo the fingerprint background checks. ||||| Mayor Steve Adler maintains that the ridesharing firms are "welcome to stay," and has offered to keep negotiating. However, it's doubtful that either of the companies will be so quick to come back. Both tend to play hardball when new laws make life difficult, often by threatening to end service -- they give up their main bargaining chip if they don't follow through on that threat. Sure enough, Lyft says this is taking a "stand for a long-term path forward," while Uber feels nothing but "disappointment." 
 
 No matter what, the outcome will be mixed. Opponents to Proposition 1 are happy that companies which do operate should have a stricter vetting process that reduces the chances of drivers committing crimes. It also pleases emergency crews worried that they'll have to dodge around mid-street pickups. However, the withdrawal is bound to be a hassle for both customers and drivers. Austin is a very car-focused city, and going without ridesharing means either paying much more for a cab or else using a mass transit system that's far from ideal. And of course, drivers who made significant cash through these services now have to scramble to find other work. Things aren't set in stone yet (this is just a proposition), but Austinites could still be in for a shock. ||||| Uber Technologies Inc.’s misfortunes may have created an opening for its underdog rival Lyft Inc. 
 
 In 2017, Uber has been plagued by an anti-immigration protest leading to a #deleteuber campaign from consumers, reports of sexual harassment at the company levied by a former engineer, a lawsuit from Alphabet Inc. GOOGL, +0.32% GOOG, +0.38% over self-driving car technology and a criminal investigation into Greyball, Uber’s software program that helped drivers evade government officials. 
 
 During that time period, Lyft has been closing the gap with Uber in terms of app downloads. Now, with an investigation that called for a revamp of Uber’s culture and led to Uber Chief Executive Travis Kalanick stepping down shown to be harming Uber’s brand, the lead could narrow even more. 
 
 Uber still has a lead over Lyft in terms of daily downloads in the U.S., according to app analytics firm App Annie, but Lyft has been closing the gap this year, with about a 70% difference between the two companies as of May. 
 
 Lyft is concentrated in the U.S., so from January to May, 95% of its downloads on iOS and Google Play were in the U.S. In that same period, only 15% of Uber’s downloads were in the U.S. During January’s #deleteuber protest, Lyft beat Uber in terms of downloads on iOS devices for the first time. 
 
 Behind the download trends, American consumer favorability of Uber has hit a record low, according to Morning Consult Brand Intelligence, a brand survey firm. Using a national sample of close to 40,000 U.S. adults, the firm found that just 40% of the respondents had a favorable impression of Uber as of Monday, the lowest that number has dropped since the survey began in 2016. 
 
 Lyft is still the smaller player to Uber, with a valuation of $7.5 billion compared with Uber’s $68 billion. Lyft also has less of a footprint, with drivers in 350 U.S. cities, while Uber is in more than 70 countries and 460 cities. 
 
 But Lyft has taken a route of partnering to expand its global footprint while also teaming up with auto manufacturers, including Alphabet’s self-driving car unit Waymo, which is odds with Uber. The partnerships include a $25 million investment from Jaguar Land Rover, which Lyft announced Monday. 
 
 “People are looking at Lyft with more favorable opinion,” said Santosh Rao, head of research at Manhattan Venture Partners. 
 
 Meanwhile, Uber has been losing executives, including Kalanick, who is taking a leave of absence for an unspecified amount of time. On Monday, the company’s head of business, Emil Michael, stepped down. Uber fired Anthony Levandowski, former head of Uber’s self-driving car unit at the center of Alphabet’s lawsuit, in late May after the company said he had failed to cooperate with its investigation. 
 
 Among these departures and earlier resignations, Uber is operating without a chief operating officer, chief financial officer, chief marketing officer and head of engineering. Uber has divided up responsibilities for running the company among several of Kalanick’s direct reports, according to Recode. 
 
 Amid Uber’s troubles, Lyft has largely stayed out of the spotlight, which Jeremy Robinson-Leon, principal at Group Gordon, a corporate and crisis PR firm, said may have helped its perception from consumers. 
 
 “In some cases like this it’s better to simply let your competitor self-destruct,” Robinson-Leon said. 
 
 But that self-destruction isn’t assured. While Uber has a wide breadth of issues, which he said may only be comparable to Chipotle Mexican Grill Inc.’s CMG, -0.16% food borne illness scandal for their “unstoppable flow,” it could turn it around by taking “big corrective action.” 
 
 He added however, that even though Uber said Tuesday that it had chosen to adopt all the recommendations from the investigation led by former Attorney General Eric Holder, including recommendations on addressing discrimination and harassment, it still has lingering issues that the report does not correct. 
 
 Additionally, consumer sentiment does not always translate to corporate impact. Uber revealed some financial results through a leak to The Wall Street Journal, showing that its first-quarter revenue was $3.4 billion, up 18% from the fourth-quarter and that it had pared its loss down to $708 million, excluding employee stock compensation and other metrics. 
 
 Though Rao sees Tuesday’s report as an “inflection point” for Uber, he feels that the company still has some to regain ground, as it has such a large world-wide footprint in terms of cities and drivers. The most important step, he said, is to find a chief operating officer to take control and implement the changes in the company’s culture. 
 
 “They need to manage their next steps really well,” Rao said. “If there are any more incidents like this, that could prove to be fatal.”
– Uber and Lyft have made good on their threat to terminate operations in Austin as of Monday morning after a referendum didn't go their way. The companies spent more than $8 million—more than 50 times what their opponents spent—in a failed attempt to overturn the Texas city's requirement for fingerprint-based background checks, reports Reuters. Despite blanketing the area with ads, the companies lost Saturday's vote on Proposition 1 by 56% to 44%, reports Engadget, which notes that the companies were also fighting to be able to pick up passengers in traffic lanes. Mayor Steve Adler says he wants Uber and Lyft to stay in Austin, but the companies say they are "disappointed" and they need to "take a stand." Uber says the withdrawal will leave around 10,000 people out of work. The Uber and Lyft spend on the campaign worked out to around $223 for every vote they received, making it the most expensive campaign in city history. The previous record, Adler's 2014 election campaign, cost only a seventh of what they spent on the Proposition 1 fight. Uber and Lyft "decided they were going to make Austin an example to the nation," political consultant David Butts, who led the opposition campaign, Our City, Our Safety, Our Choice, tells the Austin American-Statesman. "And Austin made Uber an example to the nation." After the Austin vote, other cities are now expected to target Uber on the fingerprinting issue. (The company's drivers are now allowed to encourage tipping.)