Micromobility Operators Shift Business Models to Evade Local Regulation

As cities scramble to regulate shared micromobility firms operating in the public right of way, idiosyncratic local regulations have created a panoply of laws with which operators must comply. Operators have often cited such regulatory hurdles to explain their withdrawals from local markets. But one shared micromobility operator, Bird, believes it may have found a way out from under the regulatory jurisdiction of cities: with its monthly Bird rental service, Bird will rent its scooters directly to its customers for $24.00/month in San Francisco and €34.99/month in Barcelona.

         Source: NACTO

Bird argues that the long-term rental arm of its business should not be regulated in the same manner as its by-the-minute scooter rental business. As David Estrada, Bird’s Head of Public Policy recently told CNN Business: “This should be viewed no differently than if you decide to rent a Hertz rent-a-car for the day.” In other words, the company is arguing that its monthly rental business arm should not fall under cities’ regulatory purview in the same way that its by-the-minute rentals do. Uber’s shared e-bicycle business arm, JUMP, was also said to be considering launching a similar personal rental service, called JUMP+, through which JUMP e-bikes could be rented by the week. Even more recently, in what can be interpreted as another business model shift intended to evade local regulation, Bird announced that it would soon be selling its electric scooters directly to customers.

Thus, in addition to hiring transit advocates (like former U.S. Secretary of Transportation, Anthony Foxx–now Chief Policy Officer at Lyft) to help shape regulatory environments at the city level, operators may also look to shift  towards longer-term rentals and personal ownership to evade local regulation. In a state-level move aimed at countering such posturing by operators, a bill recently passed by the California Assembly (now before the state Senate) would require operators to obtain permits from cities before launching and also to “agree to rules for parking, maintenance, and safety.”

It remains to be seen whether these tactics will work, who will regulate shared micromobility systems in the long-run, and what regulations may look like, but whoever comes out on top will shape the industry for years to come. Operators will surely continue to explore ways to evade local regulation. From my perspective, cities seem to be the best suited to regulate these operators (since they are most familiar with their own idiosyncrasies, needs, and goals), but cities are notoriously short-staffed and under-resourced for dealing with such a rapidly-evolving market. They will need increased staff and project resources, expanded data capabilities, and more city-to-city collaboration – as well as a clear mandate from state and federal legislators – to effectively regulate shared micromobility in the future.