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Uber Sues Chicago Over Its Divvy Bike Share Deal With Lyft, Calling It ‘A Backroom Monopoly’

The lawsuit filed Friday seeks to void the deal Rahm Emanuel pushed through at his last City Council meeting.

A Divvy station at LaSalle and Illinois in River North.
Alisa Hauser/Block Club Chicago
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CITY HALL — An exclusive deal allowing Lyft to operate the city’s Divvy bicycle-sharing system — inked at Mayor Rahm Emanuel’s final City Council meeting in April — is a “backroom monopoly” that improperly “locks out” competitors, Uber alleged in a lawsuit filed Friday.

The suit, which seeks to void the deal, represents an escalation of the battle for bike-share and scooter supremacy between the two ride-hailing giants, and will force Mayor Lori Lightfoot to defend one of the last major accomplishments by her predecessor in court.

Read the full lawsuit.

“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,” said Uber spokesperson Kelley Quinn, who once served as Emanuel’s communications director.

Representatives for the city, Lightfoot and Lyft could not immediately be reached for comment.

The plan approved by the City Council in April requires Lyft to make a $50 million capital investment to modernize and expand the Divvy system to all 50 wards by 2021, adding 10,500 bikes and 175 stations.

Once Motivate, the Lyft-owned company that operates Divvy, completes the roll out, the expanded system would have a total of approximately 16,500 bikes and 800 stations staffed by 200 more employees.

The new bicycles are electric, with “pedal-assist” technology and the ability to be locked to a standard bicycle rack or a Divvy’s existing docking stations.

Emanuel and his advisers touted the deal as a way to expand the bike-sharing program — now clustered Downtown and on the North Side — to the South and West sides at no cost to the city or taxpayers.

The plan approved by the City Council called for Lyft to pay the city $77 million during the nine-year term of the agreement to be used exclusively for transportation projects. In return, Lyft would bank all revenues from the bicycle-sharing system up to $20 million annually, with the city getting 5 percent after that threshold is met.

Chicago taxpayers would also receive $1.5 million a year in minimum guaranteed revenue from advertising and promotions under the plan.

Divvy, which launched in 2013, has lost as much as $700,000 a year, according to city data.

The proposal would give Lyft the right to raise bike-sharing rates by as much as 10 percent annually — with larger hikes subject to the approval of the Chicago Department of Transportation, but not the City Council.

But Uber — which owns electric bicycle-sharing firm Jump — urged the City Council to amend the deal negotiated by Emanuel to be a non-exclusive pact to allow it to offer 20,000 dockless bicycles and 2,000 scooters in all 50 wards immediately. 

In return for being allowed to operate alongside Divvy as city’s exclusive dockless bicycle share provider, Jump offered to invest $450 million in Chicago, including a $60 million “community investment” and $30 million “infrastructure investment,” according to its proposal. In addition, Jump claims it would add 500 jobs to the local economy.

That was a better deal, according to Uber lawsuit — which would have become clear if the Emanuel administration had gone through a public, competitive bidding process.

The deal was approved about a week after Lightfoot defeated Cook County President Toni Preckwinkle in the mayoral election.

“Chicagoans were distracted by the 2019 mayoral election” and not paying attention to the controversy, according to Uber officials. 

The Emanuel administration “chose to ignore transparency or proper vetting, and entered into another no-bid, exclusive contract with a private company,” according to Uber officials.

South and West Side community and business leaders called on aldermen to put the brakes on Emanuel’s proposal, and likened the deal to the much-loathed parking meter privatization.

The council rejected Uber’s proposal, which city officials said “would completely trash the existing bike share system instead of the Lyft partnership, which would build upon the beloved Divvy program.”

Lightfoot started the process of implementing the expanded bicycle-sharing system on July 22, launching a series of events designed to gather feedback on where the new Divvy stations should be located and to give residents a chance to try out the new electric bicycles.