For at least the second time in five months Alibaba Group Holding Ltd. appears to be pouring money into China’s bike rental market.

Ofo Bicycles Co. may have raised around $1 billion in its latest funding round, which included Alibaba, Sina reported Thursday. That follows an Alibaba-led $700 million series back in July and takes the total to more than $2.4 billion.

This extra cash will help pay for even larger piles of trash — sorry, bikes — as part of Ofo’s vain goal of deploying 20 million cycles by year-end, up from the 6.5 million it said it had in July. Expect Beijing Mobike Technology Co., backed by Tencent Holdings Ltd., to follow with its own funding round.

You can’t blame Ofo or Mobike for raising and spending money any more than you can blame the fabled scorpion: it’s in their nature. But you can blame Jack Ma and Pony Ma, founders of Alibaba and Tencent, for being enablers of this ridiculous craze.

It’s not that bike rental is crazy. There’s a lot to be said for pedal power as a last-mile solution. But the dockless model, coupled with the thousands of bikes being dumped in cities around the world, is making a mockery of the convenience and the environmental credentials of cycling.

Maybe conservation isn’t the point. Pony Ma has said he sees bike sharing as a tool to promote payments systems, according to Chinese news outlet Yicai Global.

Pumping money into a money-losing business just to promote your own ecosystem is a familiar strategy. Alibaba and Tencent, along with Baidu Inc., did exactly that with their push into the online-to-offline sector, which includes movie bookings and home deliveries. Baidu has since retreated, while the two Mas have turned down the heat.

Prompting cyclists to use WeChat Pay or AliPay every time they ride a bike may be an effective way to keep those services top of mind and the money flowing, but at 1 yuan (15 cents) per hour, I don’t see rentals being a sustainable long-term driver of payments volume. And losing money by paying for tons of trashed bikes seems a bit like cutting off your nose to spite your face.

Ofo funding

$2.4 billion

If rental is all about promoting payments, it’s doubtful Alipay and WeChat Pay need the help. Both have recorded solid transaction growth over the past few years, and that appears to be despite any uptake in cycling.

Alibaba has seen a boom in royalty and software-technology fees from Alipay’s parent, Ant Financial, in recent quarters. Alibaba CFO Maggie Wu noted in August that while payments were part of the increase, Ant has also enjoyed strong growth in other value-added services, such as wealth management, consumer loans, and financial and technology offerings.

I also have concerns about Jack Ma meeting his fiduciary duties if he’s using Alibaba money to promote another firm’s payment platform in the hopes of enjoying some profit-sharing spoils later. Remember that Alibaba and Ant are two different companies, as their PR teams are at pains to point out. In fact, if Alibaba thinks that bike rental won’t be profitable in its own right, then management has a duty not to invest any more money.

Tencent, which still owns its payments system, isn’t in quite the same situation. Yet that doesn’t negate Pony Ma’s responsibility to shareholders, especially if he’s starting to see bike rental as more of a promotion than a financial investment.

With bikes continuing to pile up and little sign of any profit, Jack and Pony splashing more cash around are simply pouring kerosene on this bonfire of the vanities.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

To contact the author of this story: Tim Culpan in Taipei at [email protected]

To contact the editor responsible for this story: Katrina Nicholas at [email protected]

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