Bike-Sharing: Ending Soon?

In the past few years, what scholars term the ‘sharing economy’ has attracted tremendous attention and massive venture capital. Prominent platforms such as Airbnb and Uber are experiencing explosive growth, which has led to both virtues and detriments. Advocates of the sharing economy claim the system yields positive outcomes such as empowerment of ordinary people, efficiency in commerce and even lower carbon footprints. On the other hand, critics accuse it of promoting economic self-interest rather than sharing and decry it as being exploitative and predatory. Today, bike-sharing services are among the most prevalent start-up business models purportedly constituting the sharing economy. Comparable to other businesses of its kind however, bike-sharing companies have begun encountering issues ranging from regulatory hurdles to unethical business practices, vandalism and theft to uncooperative customers and communities.

Sharing remains a routine practice even today: families sharing the rewards of their labour, communities sharing access to resources and countries sharing intelligence, among other examples. While ‘sharing’ is as old as humankind, the ‘sharing economy’ in its current understanding is a fairly recent concept. However, despite its instant growth and enormous popularity among consumers, it is extremely perplexing to propose a universally applicable definition for ‘sharing economy’, especially one that reflects clarity whilst also addressing the variety of ways in which the term is used.

The generic meaning of ‘sharing’ omits methods of exchange that involve a monetary connotation, which means schemes based on peer-to-peer (P2P) asset dealings should be excluded from the sharing economy. However, if we elucidate that access to an asset can be shared instead of the asset itself, the attachment of a monetary implication becomes irrelevant and activities based on peer-to-peer asset sharing should be included in the sharing economy. Due to its ambiguous definition, scholars today consider ‘sharing economy’ an umbrella term with a variety of meanings. It is, however, most appropriate to think of it as a marketplace that connects individuals on a peer-to-peer basis, enabling them to share assets that are otherwise underutilised and idling in exchange for a price. A sharing economy, thus, offers an economical and convenient alternative to actually purchasing the asset, since the cost of sharing is considerably lower than the cost incurred on owning the asset. Hence, this model can also be called a ‘collaborative economy’ or a ‘peer economy’.

The rise of this ‘peer economy’ has been highly transformative over recent years. It has altered the way we commute, lodge, holiday and borrow, by employing ‘dead capital’ in more productive fashions. Accredited with altering the way we commute, among other examples, is the bike-sharing industry. It has received increasing spotlight in recent years for enlarging mobility options and lowering transportation costs for consumers. The bike-sharing industry has augmented the use of public transport, reduced traffic congestion and fuel consumption, delivered health benefits and improved environmental awareness among the public. It also acts as a resort to the ‘first mile-last mile’ problem of transit. Bixi, a bike-sharing company, proudly professes that it has helped reduce over 3 million pounds of greenhouse gases in Montreal in 2009. Another such program that began in France in 2005 or so claims it has saved the equivalent of 18.6 million pounds of carbon dioxide pollution from the atmosphere in a year. In 2008, 28% of Vélib’s customers, a bike-sharing company based out of Paris, stated they were less likely to use their personal vehicles.

But the question is, is the bike-sharing industry truly a part of the sharing economy? Undertakings in the sharing economy are immensely diverse. TaskRabbit, an errands site, is considered a part of it but Mechanical Turk, Amazon’s online labour market, is not. Airbnb is virtually synonymous with the sharing economy, but conventional bed and breakfasts are rarely included in it. Even though they serve similar agendas, public libraries, community centers and parks are not counted in the sharing economy. When Juliet Schor, Professor of Sociology at Boston College, presented these puzzles to a few scholars, they gave a pragmatic response rather than an analytical one: “self-definition by the platforms and the press defines who is in and who is out”.

Today, most bike-sharing companies function as business-to-peer organisations rather than peer-to-peer organisations. This stands in violation of the ‘peer-to-peer sharing’ characteristic of a sharing economy that we established earlier in this article. Technically, an ideal model of the peer economy involves a company, customers and non-company owners of the physical asset providing customers a service, in this case, bikes. My view is that bike-sharing companies contravene marketing ethics by advertising themselves as part of the sharing economy. These companies themselves own the physical asset. Furthermore, these bikes are neither underutilised assets, nor are they idling: they are perpetually available for customers. Therefore, the honest approach would be to label it a ‘bike-renting’ business rather than a ‘bike-sharing’ business, because bikes are actually rented out to consumers and not peer-shared. Take Uber or Airbnb as examples to compare bike-sharing with the true model of a sharing business. We find that genuine sharing-companies work as aggregators of vendors and partners who are simply connected to customers, in exchange for a commission for this straightforward networking service. On the contrary, bike-sharing companies act as vendors themselves, and instead of a commission, charge the entire price upon renting the bikes independently.

The question of ethical conduct and positioning of these companies as a part of the sharing economy further deepens on evaluating their core strategy. Given the public affinity to the current wave of peer-sharing, bike-sharing companies, or perhaps more appropriately now, bike-renting companies, are attempting to build a consumer behaviour of routine and habitual renting, leveraging the sentiment of people who find peer-sharing trendy to be the ‘in thing’, or the only resort to the miseries of mankind. This has led to speculations of inflated company valuations, rendering a scar on the industry’s financial ethics, besides forming a bubble waiting to burst as the demand dips after the initial euphoria is over and more players enter the market.

Yet another bane of the bike-sharing industry is its eagle-eye for big data and metadata, an agenda that endangers user privacy. Over the last few years, bike-sharing companies have received billions of dollars in funding, but have failed to generate consequential revenue. There is widespread concern as billions are being invested in loss-making bike-sharing companies that have no profit model. These companies consume cash just to build vast user networks in order to justify higher valuations in subsequent fundraising. Despite marginal returns, investors are constantly investing in these companies, with increased frequency and greater magnitude. The real objective for these investors is securing access to millions of ‘tech-savvy’ customers, and surprising enough is their ability to go to any extent to achieve this objective. In fact, Ofo gave away rides for free when they launched in Chongqing, China. Users were merely required to register on the online app, and free rides they got. As a result of technological advancements and innovations, most bike-sharing companies today operate through online applications. External players like investors and content creators, are hungry for access to online user information from as many sources as possible, so as to build a massive customer network for themselves.

Companies like Chinese e-commerce giant Alibaba, whose financial affiliate, Ant Financial, is an investor for the bike-sharing company Ofo, are exploring opportunities to deliver other products and services to these digital customers they are monitoring on the aforementioned applications. “They are keen to access valuable data on users’ commuting habits and rental history”, says Zhou Wei, founder of China Creation Ventures. “These bike services are of high strategic importance to Alibaba and Tencent. It is an indispensable way to get data on frequent users”. Access to user data also provides information on a person’s credit history, social media conduct, and online shopping habits. Surveillance like this reveals our individual details to unidentified players who establish ‘echo chambers’ and ‘filter bubbles’ on our network so as to create custom content and influence our online buying and selling activities, news feeds and more.

Another allegation that social activists and governments always shower bike-sharing companies with is the ‘bring-your-own-helmet’ practice, which helps these companies evade liability towards the safety of their customers. In a recent case, an 11-year old boy riding an Ofo bike met with a fatal accident in Shanghai when he was hit by a bus. Road safety laws in China prohibit children under the age of 12 from riding bikes on public roads. However, bike-sharing companies have been flouting this law openly. Despite its lapse in allowing an 11-year old to rent their bike, Ofo simply expressed condolences over the mishap but failed to take responsibility for the event. As part of an example from outside China, we may note that only 20% of Hubway riders in Boston bike wear helmets. This means only two out of ten shared-bike riders riding in heavy traffic are likely to survive in the event of an accident. Absence of helmets in bike-sharing services also conflicts with insurance laws, wherein injuries or fatalities may not be covered by insurance companies. The Hangzhou bike-sharing system in China is one of the very few systems of its kind to cover any injuries that riders sustain while using their bikes. The Cambridge Cycling Campaign has also raised concerns over the absence of lights in front of most shared-bikes in China. They are apprehensive over the legal permissibility of the commercial use of such bikes. During the dark, if streets lack sufficient lighting, riders can meet with accidents and the same argument on liability is repeated.

Adding to the problem of traffic congestion, bike-sharing companies are also accused of using ‘bike visibility’ as a mode of marketing. They are heavily investing in a model that perpetually releases bikes into the market but abandons their maintenance and upkeep. In terms of ‘fleet size’, 17 of the world’s top 20 bike-sharing schemes are based out of China. Despite truncated demand, China currently has over 10 million shared-bikes on its streets, 1.5 million of which are active in Shanghai alone. The industry is engaging in cut-throat competition, with the winner title supposedly going to the company that has most bikes on the road. This has aggravated traffic congestion and hence reduced road-safety. Companies are attempting to make regional monopolies of their own: Ofo operates 2.2 million bikes across China, Mobike, about a million, and then there are over forty other startups expanding in different parts of the Mainland. “Piles of bikes dumped outside subway stations are now a common sight”, says Yang Fengchun, a professor at Peking University’s School of Government. This is happening due to the lack of docking facilities in urban cities. Bike-sharing companies are saving costs by not installing adequate docking stations. Even if the companies operate on a dock-less model, they have dusted their hands off the responsibility to manage bikes that clog public streets, parks, condominiums, sidewalks and office areas.

Non-cooperating communities also play a major role in the theft and vandalism of shared-bikes. In an interesting case recently, bike-sharing went on to symbolise inequality and discrimination for the economically backward black community residing in peripheral parts of San Francisco. The launch of the Ford GoBike scheme became a scapegoat for people who were distressed due to the housing crisis and troubled by the problem of rising income inequalities. They identified the bike-sharing trend as an indulgence of rich techies, hipsters and young professionals, who used them to commute to popular coffee shops and high-end food joints. Bike-sharing has hence been criticised in localities that lack efficient and organised city services. In such an environment, the industry produces more adversaries than peers, thus encouraging unethical practices and inappropriate conduct.

As a result, several bike-sharing companies have had to seal operations from time to time. Wukong Bicycle lost 90% of its bikes to theft and vandalism, hence having to end operations in June 2017. In a similar case in November 2017, Bluegogo declared bankruptcy since most of its bikes had either been stolen or wrecked, leaving no other option for the company but to shut down operations. Outside China, the state of affairs is no better. Seattle ended its Pronto scheme this March; a bike-sharing program in Melbourne also ended in failure when its demand dipped after the enforcement of a law that mandated wearing helmets while riding. Spain seems to have suffered the highest casualties: 65 of the 130 schemes that began in Spain back in 2010 have shut down, half of them concluding operations within three years of opening.

Today, it is also important that we examine the morals of governments. Why are cities being designed only for cars? Why does urbanisation involve more automobiles and not more ‘thought-o-mobiles’? Is it not unfair to disregard people who perhaps choose to cycle due to financial constraints or health motivations? The world is tirelessly discussing climate change and the impact it will have on future generations. Governments themselves are pledging to relegate pollution in a variety of ways. One of these ways is to reduce motorised vehicles on the road. While governments do advocate the necessity of owning lesser cars and using them less often, they end up sponsoring hypocrisy by failing to provide and support alternative measures. The bike-sharing industry could have structured a new way of life by now, where the main mode of transport for citizens was a shared-bike. But, consistent with their neo-capitalistic propaganda, governments are busy building highways and expressways to facilitate motorised commute while resource allocation to boost bike-sharing barely seems existent.

We can cogently affirm that the bike-sharing industry is not a true manifestation of the sharing economy. In reality, it is modelled more on a rental service than a peer-sharing facility. Further, all evidence presented throw light on a spectrum of problems: several people have lost their jobs and perhaps still remain unemployed with bike-sharing companies having to shut down operations; land, plant and machinery have gone largely underutilised on account of the same; the industry has witnessed numerous regulatory hurdles that include infringement of current legislations and the imperative need for new and more comprehensive ones; the government has been unsuccessful in extracting benefits of the industry for the public; and finally, criminal activity by society has gone largely unpunished. The bike-sharing industry can hence be identified with more negatives than positives today. Bike-sharing companies, the society and governments, all have a role to play in its flawed model of business and sheer disregard for ethics. Though seemingly pacing ahead with consistent innovation and expansion, the bike-sharing industry has begun its gradual decline. It will soon meet its end lest all its stakeholders pedal to survive…


Shivang Singh

An ambitious, perseverant, and all-rounded parliamentarian in the making...

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