For the reasons I wrote about in my review, I think Bluegogo fills a niche that isn’t served by other SF transportation options, so for that reason at least I’d really hope they can work out any regulatory problems! As the service exists at the time of review, with bikes taken from and returned to rented space in existing parking lots, to me it doesn’t seem much different than the tourist bike rental services that are all over the city already.
The full Bluegogo vision of being able to park a bike at any public bike rack in the city is probably where the regulatory problems are happening though. This seems more reasonable to require some sort of deal with the city. Ideally though, Bluegogo would be using the racks for the same end result that the city built them for, and would actually do much more to encourage people to bike than it would to block people from parking their own bikes. I hope Bluegogo and the city can come to an agreement that does optimize for this ideal and makes both parties happy.