Uber and Lyft are to pull out of Austin, Texas on Monday, rather than comply with a requirement to run fingerprint-based background checks on drivers.
Both companies will suspend operations in Austin starting on Monday morning, leaving more than 10,000 taxi drivers in the Texas capital without their driver jobs.
This may be only the first city in Texas to lose Uber and Lyft service.
Uber has also threatened to pull out Houston if the city does not remove fingerprint requirements.
In Austin, voters rejected on Saturday a proposal backed by Uber and Lyft that would have removed the fingerprinting requirement. The ballot measure failed despite Uber and Lyft spending a combined $8m canvassing for support.
Uber and Lyft have strongly resisted fingerprint checks because they take too long — typically three to four months — and are more expensive. Uber says existing background checks, which pull from federal, state and county court records, are just as accurate and do not discriminate against racial minorities the way that fingerprint checks can.