Turo countersues in car-sharing standoff at San Francisco’s airport

In January, the city of San Francisco made the unusual move of suing a tech startup. Turo, an app company that allows people to rent out their personal cars, had failed to pay the fees required to operate legally at the SFO airport, the city alleged. Turo claims it shouldn’t be subject to the same regulations as legacy rental car companies. And today Turo responded by counter-suing the city.

The city says Turo is flouting rules that are in place to keep people safe and maintain a level playing field. Turo claims the city is carrying water for established car rental companies like Enterprise and Hertz.

It’s an escalation in a months-long turf battle that’s pitted traditional car rental services against upstart mobility companies that are seeking to disrupt their business model — which probably sounds familiar to anyone who has followed Uber’s rise to dominance over the last few years. Much like Uber, Turo claims that it’s a technology platform that helps car owners earn extra money by “sharing” their vehicles with other people. Uber eventually had to concede that it was more than just a neutral software provider; Turo still wears that distinction with pride.

Turo, which claims about 4 million users in more than 5,000 cities in North America and Europe and has been referred to as the “Airbnb for cars,” says it appeals to travelers because they can find short-term car rentals that are cheaper than those of its corporate peers. Drivers also avoid waiting in lines to pick up their cars. The company, which was formerly known as RelayRides, has raised money from Daimler AG and is currently valued at $700 million.

Turo, which takes a 25 percent cut of each transaction, enables its users to meet and exchange keys. Often those meetings take place at airports, sparking this latest legal battle. “Turo and our community is being perceived as a major threat to the dominant market power they have for rental cars,” Michelle Fang, general counsel for Turo, tells The Verge.

“They” refers to Enterprise Rent-a-Car, the 67-year-old rental company based in Clayton, Missouri. Fang claims that Enterprise, along with the lobbying group American Car Rental Association, is spearheading a nationwide effort to pass state legislation hostile to Turo’s business. “They view us as an existential threat,” she says, citing bills introduced in Missouri, Maryland, New Hampshire, Maine, West Virginia, Indiana, and California that would tax businesses like Turo as if it were a rental car company.

But city officials claim that Turo wants special treatment that it hasn’t earned. “Turo executives seem to think the rules don’t apply to them,” City Attorney Dennis Herrera said in a statement last month. “They seem to think traffic congestion is someone else’s problem, and that their company doesn’t need to pay its fair share for the public facilities it is profiting off of. They couldn’t be more mistaken.”

Turo users like the diverse selection of cars available on the platform, hosts say. One user, who asked to remain anonymous, tells The Verge that the majority of people who rent her 2012 Volkswagen GTI have owned a VW in the past and enjoy talking with other owners.

She says that airport drop-offs at SFO account for about 70 percent of the transactions she does on Turo. “The rentals covered not only my car payment but my insurance as well,” she adds.

Fang argues that Turo isn’t anything like a car rental business, and shouldn’t be regulated as one. “We don’t own a fleet of cars, we don’t have any of these physical locations,” she says. “We’re in the business of providing an internet platform. We’re definitely not a rental car company.”

Can Turo get away with the same argument that Uber tried to make for so many years? Maybe, because unlike Uber, it doesn’t seem — at least not on the surface — that Turo shares Uber’s goal of total market domination. Fang also notes that unlike Uber, which routinely thumbed its nose at regulators’ attempts to bring it to heel, Turo has been trying to negotiate a solution with SFO for months, but the airport has so far declined to come to the table. “We’re not a rental car company, we don’t think that’s appropriate,” she says. “But we’re willing to come up with some sort of compromise.”

By taking on Turo, the rental car industry risks being seen as stuck in the past. Rental car companies have struggled to keep their stock prices up as vehicle ownership models evolve and “mobility” has become the buzzword du jour. But they haven’t been slouching necessarily. Avis struck a deal with Alphabet’s Waymo to clean and maintain the tech giant’s self-driving cars. Hertz is leasing cars for autonomous testing to Apple. And Enterprise is also trying to position itself as an early adopter of driverless vehicles.

In a statement, Enterprise says that while it is “open to new ideas and innovation,” it also believes in fair competition. “Today, we still continue to evaluate all new mobility ideas, including how to manage an autonomous fleet,” a spokesperson said in an email. “However, we believe the playing field should be level and fair for everyone involved in ground transportation – and that is especially true when it comes to safety issues like designated pick-up airport locations as well as any legal restrictions concerning manufacturer vehicle recalls.”

That echoes comments Fang said she has heard Enterprise’s lobbyists make when pushing for legislation that would restrict Turo’s business. “In one of the face-to-face meetings, we’ve heard an Enterprise lobbyist say, ‘We just want a level playing field,’” she said. “The irony is that the field is tilted completely in their advantage.”

Other rental car companies say they will be watching the legal battle between Turo and SFO intently. Avis Budget Group’s chief innovation officer Arthur Orduña told The Verge helped cast some light on why rental car companies are so protective of their airport turf.

“Airport relationships that we have are extremely important to us,” Orduña says. “Managing and maintaining those relationships now and in the future, especially as we evolve and our fleets evolve, as we move to [autonomous vehicles], that’s something we need to work really closely with the municipalities that own and manage most of the airports.”

He adds, “Very interested to see how this plays out.”