Uber/JUMP Launches a Misleading Campaign to Sink the Lyft/Divvy Deal

An online ad from the Pump the Brakes campaign.
An online ad from the Pump the Brakes campaign.

The current conflict over who will expand Chicago bike-share citywide is essentially a proxy war between the two major ride-hailing companies. This week Uber rolled out questionable tactics in its effort to kill to the impending Lyft/Divvy deal, in the form a website urging residents to lobby their alderman against it, featuring some misleading, and downright false, statements about the Lyft contract.

Lyft purchased Motivate, the Divvy concessionaire, last summer, and on March 12 the city of Chicago announced that it planned to enter a sponsorship and expansion deal with the ride-sharing firm. Pending City Council approval, a contract amendment would have Lyft replace Blue Cross Blue Shield of Illinois as the sponsor, which means Lyft logos would replace Blue Cross emblems on all the bikes. The system would expand by 10,500 cycles and 175 stations to serve the entire city within three years, with Lyft spending $50 million on the hardware. The city would get an additional $77 million in revenue during the remaining nine years of the existing contract.

All of the new new bikes would be electric-assist models with a “lock-to” dockless option, so that users could either lock at a station, or to a rack or a pole near their destination. The city would maintain ownership of the Divvy system and the existing hardware, while Lyft would own the new hardware. As part of the agreement, Lyft would be given a monopoly on Chicago bike-share.

A Divvy bike with a new fender prototype. Photo: John Greenfield
A Divvy bike with a new fender prototype. Photo: John Greenfield

Uber owns JUMP Mobility, a dockless electric bike company that participated in Chicago’s Far South Side dockless pilot last year. Immediately after the Lyft/Divvy deal announcement, Uber notified the Chicago Sun-Times that it had made an expansion pitch to the city last December 5.

The company said it offered to deploy 20,000 JUMP bikes and 20,000 dockless electric scooters in all 50 wards by May 2019. It also claimed it would spend $200 million over five years on bike infrastructure, including charging station, bike racks, and bike lanes, which would be increased to a whopping $450 million investment if Uber was given the bike-share monopoly.

Chicago Department of Transportation commissioner Rebekah Scheinfeld told the Sun-Times that the city never seriously considered Uber’s pitch because it is in an existing contract with Lyft/Motivate, and because it was important to the city to maintain ownership of the city’s bike-share system. “We think having a dockless system citywide in addition to a Divvy system citywide would create unnecessary redundancy and more impact to the public way.” She added that Uber’s desire to deploy scooters was also a deal-breaker. (The Lyft contract would not include scooters or block other companies from operating scooters here.)

The Sun-Times headline claimed that Mayor Rahm Emanuel “might have left money and bikes on the table by choosing Lyft” over Uber for the expansion. Scheinfeld pushed back at that notion in a subsequent letter to the paper noting that “The idea that Uber could, from scratch, achieve city-wide service by May and match the current level of customer service that Chicagoans expect isn’t just implausible, it’s laughable.”

That was a very sensible statement by the commissioner. If only she had voiced the same kind skepticism about Elon Musk’s infinitely more implausible O’Hare Express scheme.

Arron Muhammad, owner of Akhira's Praline, Candy & Coffee House, test rides a Jump bike. Photo: John Greenfield
Arron Muhammad, owner of Akhira’s Praline, Candy & Coffee House, test rides a Jump bike. Photo: John Greenfield

Scheinfeld added that, unlike the Lyft deal, Uber’s pitch didn’t give the city the right to set quality standards or limit price increases. (Under the Lyft contract, CDOT would have to approve any Lyft fare increase over 10 percent per year, although that could still result in the cost of the $99 annual membership more than doubling during the next nine years.) In addition, the Uber pitch didn’t include sharing ad revenue. “And perhaps more importantly, Uber has never executed a bike sharing program to the scale of what exists in Chicago to the standards Divvy riders expect,” she wrote.

The Active Transportation Alliance has endorsed the Lyft/Divvy deal, arguing that the Uber offer is flawed because it would have privatized most of Chicago’s bike-share network, and Uber could have “removed bikes at any time.” We’ve seen that happen with privately owned dockless fleets in cities like Camden, New Jersey, and Rockford, Illinois, where, after the systems proved to be unprofitable, the companies packed up their bikes and went home. Read Active Trans’ letter to Committee on Pedestrian and Traffic Safety letter chair Walter Burnett on the Lyft/Divvy deal here.

That’s not to say that there aren’t potential pitfalls with the Lyft deal. Like many other projects these days, Mayor Rahm Emanuel is trying to move the initiative swiftly through the City Council on his way out the door. A Committee on Pedestrian and Traffic Safety hearing on the contract is scheduled for this Thursday at 11 am in room 201 A of City Hall, and if it passes in committee the full Council will vote on it on April 10. The devil’s in the details, so it’s crucial for aldermen to scrutinize the contract before passing it. 32nd Ward alderman Scott Waguespack has promised to do so.

But that doesn’t excuse Uber/JUMP from launching a rather misleading online campaign to thwart the deal under the url PumpTheBrakesChicago.com. I first learned about it via an ad on the Politico Playbook news digest this morning.

“The city of Chicago is racing into an exclusive, backroom deal that gives Divvy a monopoly and leaves money, jobs, and equitable transportation access for all neighborhoods on the table,” the ad reads. “The City turned down a $450 million bike-share investment package from JUMP—an investment that would have provided access to bike-share across all 50 wards by May 2019—in favor of a $50 million deal with Divvy that excludes all competition and won’t see bike-share expanded until 2021.”

There are several misleading statements and half-truths there. The Lyft deal would also provide bike-share access for all neighborhoods. Uber is saying that the city passed up a chance for a $450 million bike-share deal in favor of a Lyft monopoly, but Uber wanted the monopoly for itself, and would have only spent $200 million if it didn’t get it. And while 2021 is a realistic deadline for deploying 10,500 more bikes citywide, the notion that Uber — which has no experiencing operating a system with several thousand bikes in a large city — could set up a 20,000-bike system in a matter of months is, indeed, “laughable.”

Chart from the Pump the Brakes website, including some misleading info.
Chart from the Pump the Brakes website, including some misleading info.

The Pump the Breaks website includes a link for residents to contact their aldermen to lobby them to kill the Lyft deal. It contains additional misleading or false statements about the Lyft contract:

  • Uber claims the deal would give Lyft a monopoly “for more than ten years.” Nope, only nine.
  • Uber claims it would offer $5/month unlimited rides for low-income residents whereas no pricing details have been released about the Lyft plan, ignoring the fact that the city announced that the existing $5/year Divvy for Everyone (D4E) program would be expanded under the Lyft deal.
  • Uber claims cash payment would not be allowed under the Lyft deal, but cash payments are already allowed under D4E.

Efforts like this by venture-capital backed mobility companies trying to shape Chicago transportation policy are tiresome. We recently called out Lime for using a similar tactic to try to influence the Chicago mayoral election. In fairness, Lyft has surely done similar lobbying efforts to influence local ride-hailing legislation. But when the info in the lobbying materials is misleading and, in some cases, inaccurate, as is the case with Uber’s new campaign, that’s a problem.

  • planetshwoop

    thanks for covering this John. I feel like the deal was made to generate headlines — “City leaves $450M on the table with back room deal” but upon the tiniest of reviews it shows Uber’s claims to be inaccurate.

    Uber has shown itself many many times to be an untrustworthy company to work with. This is another example of that.

  • hopeyglass

    LOL, this is AMAZING. Totally anecdata, but from what I’ve seen on backend stuff of the operators that have to run these almost franchised-based JUMP locations, the fact that they’d even bother trying to provide the level of service that Motivate and (*hopefully*) Lyft have/will provide.

    Y’all, they have … not a great grasp on what they’re doing. Also they don’t have any interest in local management/local investment in their workforce or their processes, so, I am not a big fan. (/ to heck with Uber.)

  • ChicagoCyclist

    I agree that Uber is / has shown itself to be “untrustworthy.” Just like with Goldman Sachs / LAZ parking. Just like the Spanish company that bought the Skyway. The point is that ALL for-profit companies — above all, all publicly traded companies, which Lyft will soon be — have as their over-riding, guiding, principal goal and raison d’etre the maximizing of profits for shareholders. Lyft is no different. Everything they or any other public, for-profit company says about caring for the public good or the society is PR bunkum (as they used to say). The city needs a BEVY of hard-nosed, realistic, uncompromising, inflexible, paranoid, hyper attentive, detail-oriented, incorruptible, super experienced, progressive-minded, brilliant lawyers to ferret out every detail that would put Lyft’s interest above the public interest. Remember, bikeshare is a form of public transportation. We don’t sell our subways or commuter rail systems to private for-profit companies, do we? And there is a reason that we don’t.

  • johnaustingreenfield

    There’s untrustworthy, and then there’s “greyballing”-city-inspectors, ignoring-sexual-harassment-of-employees, CEO-captured-on-camera-ranting-at-a-driver untrustworthy.

  • FlamingoFresh

    Well seeing how Jump has stamped their logo all over that PumpTheBrakesChicago website, the City should see if Jump is backing what they are advertising. From the website, they are now claiming non-exclusivity and will still invest $450 million. I know it was state previously that the contract would invest left if not given exclusivity but they’re advertising otherwise so they should follow up. If Jump is just trying to pull a fast one then the City should call them out (again) and hurt their image more.

  • rohmen

    I think the non-exclusivity point Jump raises on the website relates largely to Divvy itself continuing (and apparently Divvy expansion, though I imagine knowing that Lyft will not do this deal without exclusivity, so back to what Divvy alone could ever do through City funds), not other private bikeshare companies.

  • Sam K

    I’m skeptical. $50 million over 9 years is about $5 million per year. Already, before the deal was proposed, Divvy bikes were old and in need of replacement, Divvy was looking to add lots of e-bikes, and it had longstanding plans to expand throughout the city. I wouldn’t be surprised if they were planning on spending most of this money anyway. How much more is the city really getting in exchange for exclusivity?

    I am also puzzled by the vagueness of this “investment in the city” language. These are private companies, and they spend money to make money regardless of whether it’s good for the city. Not all “investment” benefits the city in the same way. As it’s being used here, it seems like “investment” covers everything from building a new dock (good) to dumping 20,000 scooters (bad).

  • FG

    Not to mention that their docks are starting to look ratty (in typical Chicago lack of maintenance fashion) – I noticed the dock near my house was rusting badly and so is the picture at the top of the page. While I don’t think it’s a functional issue, it’s a signal of poor design and upkeep (and probably costs cut elsewhere).

  • planetshwoop

    These are private companies, and they spend money to make money regardless of whether it’s good for the city.

    That is usually true of a company and over the long run probably true. But for Lyft/Uber, that’s not quite correct. They have never made money. In fact, they are about to go public and lose $1B/year.

    So they spend money because they have buckets of it and are in an irrational bubble. Eventually Uber and Lyft will need to merge and/or raise prices (or pay drivers less) to make it work. They are making the investment in Motivate bc they overpaid and need a story to tell. It’s the story and the advertising they really want, making money will come later.

  • FlamingoFresh

    Well that’s evident since Jump and Divvy are the only ones up for discussion, at this time. But if Jump could get a foot in the door to Chicago via a contract, you think Divvy would just throw in the towel? I know the City is still currently under contract with Divvy but I don’t think there is exclusivity for this current contract, hence the dockless bike pilots. Obviously, with Jump being privately operated and Divvy being publicly operated, there are differences that must be considered.

  • rohmen

    I think Divvy would continue, and expand similar to how it has to date—essentially through City funds and federal grants.
    I doubt Lyft/Motivate will invest anywhere near what they’re talking about investing (or anything) if they have to deal with the fact that the City retains ownership of Divvy and controls pricing (outside of predetermined increases), while a private company gets to compete with little to no checks on operations. It would be like competing with Jump with one hand tied behind their back, which is I think why Jump isn’t scared of doing it.

    The worse case scenario would be that Jump brings in 20,000 bikes, and that essentially means Divvy doesn’t expand at all (it’s hard to justify expanding a public program and spending public funds if a private entity is already providing the service). Jump then figures out they can’t make a profit, and pulls the bikes in a few years.

    The above is why groups like Active Trans are speaking out against the Jump deal—it basically turns rideshare in the City largely over to complete private control, which means they could simply pull out at any time, or charge whatever they want.

    The question is whether a public system and a private system can really compete against each other without harming rideshare overall. I’m not convinced that they can, and this seems like an area where a single, unified City-owned system managed by a private company (like Divvy is now) is probably better in the long run.

  • Mark Smithivas

    It would be interesting to research whether any of these “community groups” opposing the deal are secretly funded by Uber.

  • Kevin M

    Re: “We don’t sell our subways or commuter rail systems to private for-profit companies, do we?”

    I do not doubt for a second that Lyft/Uber have a long-term strategic plan that includes owning the profitable portions of the CTA (and like, in other cities). Conquer all the American capitalism way.

  • Austin Busch

    If we give Lyft a bikeshare monopoly on the city, do you think the city could convince Lyft to help back no-ride-share zones? Lyft would at least be more likely to support congestion pricing and higher rideshare taxes in well-served bikeshare areas.

    Say the city bans rideshares in the Loop. Lyft could still make moneyon those central trips with their electric bikes, but Uber would be shut out of competition. The city could use that financial quirk to convince Lyft to argue against themselves in an attempt to enlarge their own monopoly, thereby reducing total rideshare/car usage.

  • johnaustingreenfield
  • Weston

    “And while 2021 is a realistic deadline for deploying 10,500 more bikes citywide, the notion that Uber — which has no experiencing operating a system with several thousand bikes in a large city ”

    This is false. Jump operates 1000’s of bikes in several markets across the country including Seattle, Austin, San Diego, etc.

  • johnaustingreenfield

    Numbers?

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