Electric Scooters Are Giving U.S. Cities Uber Déjà Vu
(Bloomberg) -- Bird, a startup that deploys electric scooters with location trackers on city sidewalks and rents them through an app, trumpeted two weeks ago that it was bringing its service to San Francisco. The company, run by a former honcho at both Uber Technologies Inc. and Lyft Inc., said it was determined to make sure everything went smoothly with city officials.
It failed. On Monday, San Francisco sent cease and desist letters to Bird Rides Inc. and two other motorized scooter companies, LimeBike and Spin. The business practices of all three companies “create a public nuisance and are unlawful,” wrote City Attorney Dennis Herrera. San Francisco has been warning the companies for weeks, he said. Herrera presented the companies with a list of changes the city wants them to make and demanded written progress reports by the end of the month.
GPS-enabled scooters and bicycles are spreading across several major U.S. cities, driven by a wave of venture capital into a handful of companies. Policymakers are scrambling to find ways to regulate the great scooter boom of 2018. San Francisco’s board of supervisors on Tuesday passed a bill requiring electric scooter rental companies to get city permits. The transportation department in Austin, Texas, presented lawmakers with its own plan to regulate scooters on Tuesday, and asked for a n emergency vote by the full council next Thursday. In Washington, D.C., a pilot program granting permits to electric scooters and bike-rental companies is set to expire soon.
Bird and LimeBike—the two largest companies in the U.S. market—run similar services that involve leaving a bunch of scooters around town, letting smartphone-toting customers unlock them for a small fee and scoot from place to place. Each company has raised more than $100 million in the last six months, and both make idealistic claims about solving urban congestion and reducing reliance on automobiles. LimeBike also rents bicycles, as does Uber, which got into the game last week with the acquisition of Jump Bikes.
But problems quickly became apparent. Unused vehicles create new obstacles for pedestrians walking or running on sidewalks. In at least two cases, the vehicles were abandoned in local waterways. There was nothing to keep people from riding them on sidewalks or without helmets, both violations of municipal laws. In short, scooting is a pretty good parable on the excesses and hubris of the technology industry. It provides a convenient service that generates a lot of excitement among its users—San Franciscans have already taken tens of thousands of rides on Birds—but also generates ill effects for the rest of the population. Companies promise to figure out the problems, but they’re mostly focused on outgrowing one another. They tend to see anything that slows them down as either wrongheaded, ignorable or both.
Bird and LimeBike said they’re committed to working with officials to address their concerns. Bird rolled out a potential solution to the parking issue on Tuesday. It will require people to take a photograph of where they left the scooter at the end of their rides. David Estrada, Bird’s chief legal officer, said the company would likely implement this in many cities but declined to provide specifics. Bird’s Uber-style approach to introducing the service—making it available to the public without a lengthy negotiation with each city over policy—is better for everyone, said Estrada, who previously helped get Lyft off the ground and worked on driverless-car policy at Google. “We actually think we’ve helped create better regulation, because now we have data,” he said.
This process grates on many people who have gone through it before, causing flashbacks to Uber under its controversial co-founder Travis Kalanick. In San Francisco, expressing an opinion about scooting is, in effect, casting a vote in the long-running referendum about the cultural mores of tech bros. Supporters sing the virtues of cheap and accessible transportation with the promise of reduced traffic and cleaner air. Critics say the service gives rich tech employees a whimsical way to bar-hop at the expense of crowded and dangerous sidewalks. The more scooters, the greater strain on the city. Tech companies, they charge, are often blind to these tradeoffs. “The silver lining of the Bird scooter fiasco is that it’s a great way for econ teachers to explain negative externalities and the tragedy of the commons,” Chris Anderson, a former editor of Wired magazine, wrote on Twitter.
The parallels to ride-hailing are irresistible. Uber constantly butted heads with officials in its hometown and practically every other city it charged into. Santa Monica, California, where Bird is based, sued the company soon after it rolled out, and the two sides eventually reached a settlement allowing Bird to continue operating.
Companies looking to disrupt transportation don’t have the same incentives as the governments tasked with regulating it. “There is a nature to our streets that is a tension between chaos and order. The more you try to create order, the more you infringe upon innovation,” said Adie Tomer, a fellow at the Metropolitan Policy Program of the Brookings Institution, a research organization. Many officials came away from their fights with Uber and Lyft doubting the good faith of tech companies, Tomer said. “All the ingredients are there to have that kind of scarring.”
Bird and LimeBike were well aware of this dynamic. Yet the companies managed to fall into the trap anyway, in part by pushing each other in. When Bird launched in San Francisco, the company said it would pick up every scooter every night, remove any vehicle that wasn’t used three or more times a day, and even impose a voluntary tax on itself of $1 per scooter per day and then send the proceeds to the city. The company committed to doing this in every city it operated in and asked competitors to follow suit.
A spokesman for LimeBike called Bird’s proposed self-regulation a PR stunt. LimeBike said it wouldn’t launch in any city without the blessing of local officials. But as it tried to iron things out with officials in Austin, Bird simply launched. The city impounded dozens of scooters but also indicated it wouldn’t shut down the service altogether. So on Monday, LimeBike zipped into Austin. Estrada said Bird went to San Francisco largely because rivals were already operating.
Perhaps the current controversy with scooters will be a bump along the way to a radical shift in urban transportation, where people use their phones to find motorized scooters for short rides, hail cars for longer ones and spend far less time in vehicles they actually own. Despite outcry from residents, city officials aren’t proposing to shut them down. The main concern for scooting companies is the proposed restriction on parking and caps on the number of vehicles, Estrada said: “We need to be able to grow to take cars off the road.”
©2018 Bloomberg L.P.