Seattle bike share Limebike accuses Ofo of unfair business practices
SEATTLE - Seattle bike share company Limebike is accusing Ofo of unfair business practices, by not charging customers for rides in an attempt to drive out competition.
An estimated 10,000 rental bikes are on the streets in Seattle, with the majority from Limebike and Ofo.
The third company, Spin, said it removed many bikes from Seattle as part of a national redeployment.
Limebike and Spin were the first companies to deploy bikes that use a locking mechanism with a GPS tracker to provide a unique, "park-where-you-want" bike share program.
Ofo put its yellow bikes on Seattle streets in August.
Pricing for all bikes has been the same: $1 per hour, rentable by using one of the company's smart phone apps tied to a users credit card.
Each company is now allowed to have 4,000 bikes available for use at any one time.
The Seattle Department of Transportation (SDOT) is working with the University of Washington to collect data from the GPS units, to evaluate the success of the program.
SDOT reported 347,000 trips using bike share bikes between July and November 2017, with riders racking up more than one million miles.
But, SDOT admits the bike share companies are not required to report revenue from those rides. Only the bike share companies know who had a free ride and who didn’t.
Limebike claims Ofo has not been charging customers for the last several months.
“It’s certainly not fair if you've got endless coffers to drive others out of business,” said Gabriel Scheer, Director of Strategic Partnerships for Limebike.
The coffer he refers to is substantial backing from Alibaba, China’s equivalent to Amazon.com.
Financial news organizations reported that Alibaba invested $3 billion into Ofo, which puts the company’s total evaluation at $10 billion.
Ofo is in a mammoth battle with Mobike for bike sharing dominance in China.
Mobike is backed by Tencent, a Chinese company that has as much power in China as Facebook has in the United States.
The result of all this, according to Scheer, is Ofo’s ability to offer free rides in the United States, which he believes could have been since they began operations in August.
“I don’t know how long they can do that, we couldn't run forever without revenue,” said Scheer. “We actually have to make money to build a business that will stick around, and our goal is to stick around and be here for the long term.”
Limebike has received $62 million in venture capital and is based in California’s Silicon Valley.
Spin won’t go as far as to say Ofo is guilty of unfair business practices, but said its competitors, “are being forced to take actions” that hurt themselves and the bike sharing landscape in the U.S.
In a statement to KOMO News, a Spin representative said those actions are fueled by, “unnecessary investment pressure” and include “dumping bikes, pushing for local regulatory preemption, and engaging in anti-competitive behavior - like giving away unlimited free rides.”
Ofo touts itself as the world’s first and largest station-free bike sharing company, with 10 million bikes in 160 cities.
In a statement to KOMO News, Ofo’s Director of Communications for North America Taylor Bennett said: "As a way to give back and say thanks to our riders, Ofo offered free rides in January, which is continuing through February. Any suggestion that we have not charged customers for the duration of our time in Seattle is simply false."
All companies offered free rides to get customers to start using their service, but are not required by the city’s permit to operate to report how many rides were free or paid, just ride data.
An employee of Ofo, who showed proof he is employed by the company, said deployment of bikes in the city was, “a mess” for about a month because the company was putting hundreds of bikes a day on the street.
“There’s just a giant bike mess all over Seattle,” said the employee, who did not want to be identified. “So many bikes get broken by the homeless and are taken off the street."
“And the self-locking ability on these bikes, that’s just a myth, you can ride these all day. We know where they are unless someone breaks off the lock," he added.