Mayor Bill de Blasio took on innovation and competition – and lost.

In a rare show of defeat, when a powerful union-backed politician used his muscle to push for crony protections for an industry, he was shut down by the American people who want free and fair market not cronyism.

Earlier this week, we reported that de Blasio blasted Uber over the weekend for all of the problems ailing transportation in the city from congestion on the streets to luring public transit rides away. The City Council was set to vote on regulations that would cut Uber and other ride-sharing companies down to their knees in the Big Apple. That vote never happened.

New York is one of Uber’s biggest markets and as a leading U.S. city can send signals to other mayors about the ability to shut down ridesharing. So, Uber put its game face on and turned up the pressure, using social media and PR strategies hand to bring activism to the digital age.

The NYC Uber head challenged de Blasio to a public debate about the impact of ridesharing on the city. De Blasio snubbed the offer saying he didn’t debate with big business – in the same way a President would refuse to negotiate with terrorists. Uber and its allies pointed out that the mayor may have other motives as de Blasio's mayoral campaign received more than $250,000 from the taxi industry. Talk about not dealing with big business.

Uber used TV ads and pressers to aggressively market itself as a service for minorities and outer-borough residents (two groups that taxis are notorious for ignoring) and as a means for New Yorkers to find gainful employment. Uber hosted a "jobs event" for prospective and current drivers to showcase how many New York residents' jobs will be cut if the vehicle cut takes effect.

And to educate it Big Apple customers, Uber added a cheeky “de Blasio” tab to its app in New York City. As a knock on de Blasio, the tab shows Uber riders how long they would have to wait for their rides, if the mayor’s legislation is approved by City Council. That’s a faster way to educate their strongest supporters in this fight than a hundred op-eds in the New York Times and New York Daily News in one week.

On social media big names came to Uber’s rescue including actor Ashton Kutcher (an investor in Uber) and model Kate Upton as the #UberMovesNYC started going viral.

Even the NYC comptroller came out against de Blasio’s proposal.

And it all worked. Late yesterday, de Blasio with tail between his legs agreed to drop his proposals to limit ridesharing expansion. The city will still study the impact of ridesharing on congestion.

The Wall Street Journal reports:

The deal reached Wednesday under which New York City agreed to table proposed legislation to cap the for-hire car fleet came after days of political wrangling between Uber and city officials.

In exchange for the city putting the cap proposal on hold, the car-service company agreed to participate in a traffic study and discuss other issues. The deal, which came on the eve of a presumed City Council vote on the cap, began to take shape Tuesday night after an Uber executive emailed a senior City Hall official asking to negotiate.

While the cap won’t be put to a vote immediately—a victory for Uber—officials in Mayor Bill de Blasio’s administration said they could revive the measure in the council later this year.

Under the deal, the city will move ahead with the study to be concluded by the end of November, according to a statement released by First Deputy Mayor Anthony Shorris. That study, Mr. Shorris said, will “examine the impact of Uber and the for-hire vehicle industry on traffic congestion on New York City streets.”

“Uber has also agreed to maintain its approximate current rate of growth and not flood the streets with new licenses and vehicles,” according to the Shorris statement.

The deal, which isn’t written, commits Uber to discuss several issues its opponents in the city have raised, including the handicap accessibility of its drivers’ cars and surcharges that would support the Metropolitan Transportation Authority.

Bhairavi Desai, head of the New York Taxi Workers Alliance, a group that represents drivers but isn’t an official union, said she didn’t find out about the deal until it was publicly announced by the mayor’s office.

Ms. Desai said the group was deeply disappointed. “It’s also just a reminder of how much there’s corporate influence in politics,” she said.

Finally, a win for innovation and a free-and-fair marketplace. Breaking de Blasio was like breaking through a big crony fortress housing giants that terrorize the nearby small towns.

When big government and big business get together, they collude to change the rules to keep out small business and new competition. This is a superb case study of how politicians and established businesses operate. Too often, the small guy has no help or can’t afford to hire high-powered PR strategists to help them make their case. Demonstrating its superiority over traditional taxi cabs in the marketplace, Uber has built itself into a powerhouse and the disruptive ridesharing industry into a viable alternative to taxis and car services.

If we truly believe that the market works best when it’s free and fair, then we should celebrate yesterday’s victory. The victory is only one battle in what will undoubtedly be many more across this county and perhaps even in New York City.

It should be a sign to unions though that stuffing the pockets of politicians is not going to be the game-winning strategy every time anymore.