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In a lawsuit filed in California on Friday, Uber alleges that competitors’ food delivery services involve working on anti-competitive practices.
The San Francisco-based company said its closest competitor in the food delivery market forced restaurants to work specifically with them by threatening to issue penalties or devalue restaurants in the Doordash app.
Uber is seeking unspecified damages and judgments that will force Doordash to change its business practices.
“Restaurants across the country tell us that Doordash’s bullying strategy has brought them an impossible choice: meet their demands or pay the price,” said Sarfraz Maredia, head of the Americas at Uber Eats.
“We are taking legal action because competition should empower restaurants.”
The lawsuit opens up new aspects of the acceleration of food delivery services among companies’ battle for market share in competitive food delivery services.
“The Uber case has no advantage,” Doordash said Friday. “Their claims are groundless and based on their inability to provide quality alternatives to merchants, consumers or couriers.”
Doordash Drive can make restaurants and take the chains to operate their own branded apps and websites, but all delivery logistical is handled by Doordash. Customers charge fees per order.
Doordash launched the so-called first-party service in 2016, and Uber’s version of “Uber Direct” four years later also followed.
Both companies generate a large portion of their revenue from providing restaurant services, including delivery fees and advertising on their respective platforms. Uber posted full-year profits for the second year earlier this month, while Doordash reported its second quarter profit this week since its public release in 2020.
Doordash is the largest player in the U.S. food delivery market, and has previously said that about 90% of the country’s major restaurants are on its platform.
Uber said last year, a major restaurant company “suddenly notified” them that it would not launch services on several of the company’s branded platforms. “This decision stems directly from Doordash’s punitive threat to increase its commission rate,” it said in a court filing.
The ride-hailing company claims Dudash also threatened to impose “punitive fees” if customers choose to use the services of both companies, and the fees increased by 10% to 30%.
Doordash denies the claim.
