What just happened? Uber has filed a lawsuit against rival DoorDash, accusing the company of anti-competitive tactics. The complaint, submitted to the Superior Court of California, claims DoorDash's business practices unfairly disadvantage competitors and harm restaurant partners by limiting their ability to work with multiple delivery platforms.
At the heart of the lawsuit, Uber accuses DoorDash – the leading US food delivery service – of pressuring restaurants into exclusive or near-exclusive agreements for first-party delivery services. These services involve fulfilling orders placed directly through the restaurants' websites and apps.
Uber claims DoorDash's alleged tactics include threatening restaurants with substantial financial penalties or reducing their visibility on the platform if they choose to partner with competing services. According to Uber, several customers have likened the pressure to having a "gun to their head" and referred to DoorDash as a "monopolist."
The lawsuit highlights an example involving an unnamed "significant restaurant company" that reportedly withdrew from a planned Uber Direct rollout across several brands. Uber asserts that the restaurant made this decision after DoorDash allegedly threatened to raise rates for its third-party delivery services if Uber Direct continued to be used.
Sarfraz Maredia, Uber's head of delivery for the Americas, added that the company has increasingly received complaints from restaurants. According to Maredia, these restaurants claim that DoorDash's tactics are restricting their freedom and punishing them for seeking better alternatives.
DoorDash, however, has strongly refuted these allegations. A company spokesperson dismissed Uber's claims as "unfounded" and attributed them to Uber's "inability to offer merchants, consumers, or couriers a quality alternative."
This legal battle underscores the intense competition in the food delivery market, particularly within the white-label delivery services sector. Both Uber and DoorDash launched such services in 2020. Both allow restaurants to manage orders through their own platforms, while the delivery companies handle the logistics behind the scenes.
Uber claims that DoorDash currently manages first-party deliveries for over 90 percent of the largest enterprise restaurants in the US, and alleges that this dominant position was achieved through anti-competitive practices.
If Uber's lawsuit is successful, DoorDash could face several significant consequences. It may be required to pay substantial damages to Uber. While the exact amount is not specified in the lawsuit, Uber asserts that it has lost millions of dollars in revenue due to DoorDash's alleged practices.
The court could also order DoorDash to adjust its business model, particularly in how it negotiates contracts with restaurants. This could potentially involve prohibiting exclusive or near-exclusive agreements for first-party delivery services.
Additionally, a favorable ruling for Uber might allow smaller competitors to gain traction, potentially creating a more diverse and competitive market landscape.
Furthermore, a victory could trigger increased antitrust scrutiny from regulators in this space – an outcome Uber might ultimately regret.
Uber sues DoorDash, alleging anti-competitive practices in food delivery war
