San Francisco dealt a blow to the largest shared-scooter companies on Thursday, awarding two smaller startups exclusive rights to rent the electric-powered vehicles for a year in a decision that could change the course of the nascent market.
The nation’s tech capital denied permits to 10 companies, including Bird Rides Inc. and Lime, which have raised nearly $1 billion in capital to quickly populate cities with scooters — often against the will of regulators. The ruling is a clear rebuke to their pugnacious strategy, with officials citing, in part, the companies’ aggressive move this past spring to drop more than 1,000 scooters combined on the streets of San Francisco before rules could be established.
The city also rejected permits for ride-hailing companies Uber Technologies Inc. and Lyft Inc., which only recently jumped into the scooter craze. Officials said past violations in their ride-share businesses hurt their applications.
Instead, San Francisco awarded the permits to two other startups, Scoot Networks and Skip Scooters, which together have raised less than $50 million. Scoot runs a shared electric Vespa-like scooter program in the city already and a bike-share program in Barcelona, while Skip offers shared electric scooters in Washington, D.C., and Oakland, Calif. While San Francisco is just one city, it could have spillover problems for the big scooter companies, whose high-powered investors see enormous potential to reshape urban transportation.
An expanded version of this report appears on WSJ.com.
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