Call the Wahmbulance! Uber Files a Spiteful Lawsuit Claiming the Divvy/Lyft Deal Is Unfair

JUMP bikes blocking a sidewalk in Seattle. Photo: Steve Ringman, Seattle Times
JUMP bikes blocking a sidewalk in Seattle. Photo: Steve Ringman, Seattle Times

Uber’s third-quarter operating loss this year is estimated to be $4.96 billion, which Streetsblog reader Matt Michel pointed out on Twitter is more than enough money to build the entire South Red Line extension. But it looks like the company is still looking for new ways through burn through its investors’ cash.

As reported by Block Club Chicago’s Heather Cherone, Uber is spending money on lawyers’ fees with a new lawsuit filed Friday, griping that the Divvy/Lyft expansion deal, approved by the City Council last April, is a “backroom monopoly” that unfairly “locks out” other bike-share companies. The nine-year extension of the city’s existing contract with Lyft, Uber’s arch-enemy, gives Lyft the exclusive rights to operate bike-share in our city.

“By locking out other competitors, former Mayor Emanuel’s backroom monopoly fails to bring bikes to all Chicago neighborhoods — particularly the south and west sides — where they are needed most,” Uber spokesperson Kelley Quinn told Block Club.

Check out the full lawsuit in all its whiny glory here.

Under the largely anti-sustainable transportation Trump administration, federal grants for bike facilities, which funded earlier phases of Divvy, have been difficult to come by. Therefore Chicago’s deal with Lyft provided an opportunity to finally expand the system citywide at no cost to the city, while modernizing the fleet with electrical-assist, dockless-option bikes. Lyft is providing $50 million worth of hardware, including 10,500 bikes and 175 stations, at no cost to the city, and Chicago even gets to keep the equipment after the nine-year contract extension expires.

On top of that, the contract extension guarantees Chicago an additional $77 million in revenue over the next nine years and provides another $10 million for the Divvy for Everyone $5 membership program for low-income Chicagoans. Lyft is required to expand the system citywide by 2021.

In contrast, Uber’s counterproposal was essentially vaporware, promising a wealth of benefits for Chicago that the company almost certainly couldn’t have delivered in order to claim they were offering a better, more equitable deal. At the time, they implied that the city was missing an opportunity to get $450 million in investments from Uber with no exclusivity. In truth Uber would have spent only $200 million unless it was given a monopoly.

And Uber argued that the Lyft deal was unfair to the South and West Sides because Uber would have provided bike sooner, deploying 20,000 cycles by this summer. Since Uber only had a few thousand bikes spread across the entire country at the time, that was an absurd timeline. Here’s a fact sheet released by the Chicago Department of Transportation last spring debunking Uber’s claims.

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Moreover, Uber spent thousands, if not tens of thousands of dollars, at the time to promote their false narrative via the following PR and astroturfing strategies:

Uber’s lawsuit claims that the expansion deal should have gone through a competitive bid process. But rather than being a “no-bid, exclusive contract,” as the lawsuit claims, Lyft’s existing contract with the city was the product of a bid process that happened prior to the initial 2013 Divvy launch. (Lyft purchased Motivate, the Divvy concessionaire, in summer 2018.)

Uber’s lawsuit against the Divvy expansion deal is a fairly obvious case of sour grapes that seems unlikely to be much of a speed bump for the Divvy expansion, but it will be a waste of time and money for everyone involved.

Meanwhile, Lyft is moving forward with rolling out the new e-Divvies, with a series of community bike rides at which residents can test-ride the bikes and provide input on where the stations should go. View the full schedule of events here. 

  • Jeremy

    I am kind of torn about this lawsuit. If Uber wins, does that create a precedent for breaking the parking meter contract?

  • JacobEPeters

    probably not since the parking meters still compete with parking garages, and the city still issues operating concessions to new parking garages.

  • Anne A

    I’m not at all surprised by this.

  • rohmen

    This looks like Uber chumming the water to see if Lightfoot will step up and agree the contract process should have been handled differently. I really hope she doesn’t latch on to this, as I think it dies pretty quickly otherwise.

    Also, this might be in direct response to Lyft suing the City of San Francisco over exclusivity rights under the Motivate deal there, and whether SF can bid out an expanded dockless bikeshare program to other providers.

  • rohmen

    I’m pretty sure the parking meter deal was opened up to a competitive bid process, with the Daley administration indicating the bid selected was the most qualified based on being the biggest amount offered (which obviously still doesn’t mean it was actually a good deal).

  • Kelly Pierce

    Uber passed on buying Motivate because the company offered
    bike share in a regulated environment with a unionized workforce. Uber thought
    it could convince cities to allow it to offer a dockless product in an unregulated
    environment. Houston did this and it was
    a complete disaster. Other cities with
    successful bike share programs would be foolish to repeat the same mistake. Rather
    than dumping bikes across the city, the Divvy contract ensures bike
    availability in all neighborhoods.
    Besides bikes, underserved areas also need bike infrastructure, such as
    bike racks, to where the dockless Divvy bikes can be locked. The capacity of teams to survey each
    community and meet with local residents and leaders requires a two year roll
    out so locations of racks and stations can be meaningfully decided. It is silly to believe that just dumping thousands
    of bikes in an underserved area will lead to real access.

  • Tooscrapps

    Except in the CBD. Remember that lawsuit against the City over allowing Aqua Blu to operate a public garage?

  • Tooscrapps

    Yah, I don’t think Uber can argue against exclusivity when they were proposing just that.

  • Carter O’Brien

    This is going to be mighty interesting indeed, particularly in how a decision might be applied to the so-called “managed competition” no-bid contracts for Blue Carts (which has never been audited, 7 years running!)

  • Callit

    Uber will ask for pre-trial discovery on the ethically questionable bidding that got Divvy the franchise for the City’s bike share contract. Could be embarrassing if the judge doesn’t prevent it.

    https://www.chicagoreader.com/chicago/bike-sharing-contract-may-be-inside-job/Content?oid=6274245

  • Tooscrapps

    And Northerly Island *ding ding ding*

  • rohmen

    They’re trying to have their cake and eat it too. Cities enter into exclusive contracts all the time, so what Uber is arguing is just that they have to send it out for a competitive bid first. While cities clearly have a right to enter to exclusive contracts with providers, Uber is right that some of the laws at least require the City to get competitive bids first before doing so.

    The interesting thing here would be if they needed to do it in relation to extend a current contract and expand a program that had already been competitively bid on in the past, and I’d argue the answer is likely no. The City had a valid interest here in keeping continuity with the Divvy program by extending it in size, scope, and years. No way a court is going to say that wasn’t a compelling reason to not solicit bids.

  • Tooscrapps

    Agreed. Look at the massive failure of Paris’ switch.

  • Kevin M

    What are you referring to? Did Paris change their Velib carrier?

  • what_eva

    The Aqua garage suit was related to the garages under the park (Maggie Daley and Millennium), not the meters. The park garages have some kind of exclusivity zone that Aqua is within

  • Drew

    Why can’t author “John” present a fact based, un-biased case instead of all the childish references? Not a legal expert by any means, but I’ve ridden both Jump and Divvy bikes and Jump is 10x better as a product, app, and operation. Every single person I’ve talked to agrees. Divvy’s docks and bikes are literally falling apart. Their support teams never respond. I’d love to try a new product but i have no option because no one is allowed in. Isn’t that the definition of a monopoly ? I was neutral on this topic, but John sounds pretty ego centric + out of touch

  • Tooscrapps
  • Tooscrapps

    I never said it was related to the parking meters. I said the City is not issuing concessions to new public garages in the CBD, but I should have said around Grant Park instead.

  • Kevin M

    Thanks. I was unaware of this development. I used Velib in its early days and was quite satisfied.

  • Seymour Butz

    bwahahaha open competitive bid in the same sentence with Daley administration

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