Uber Files Lawsuit Against DoorDash

Ride-share and food delivery giant Uber has filed a lawsuit against DoorDash, accusing its competitor of anti-competitive practices that allegedly pressure restaurants into exclusive agreements. The lawsuit, filed in the Superior Court of California, claims that DoorDash, which dominates the U.S. food delivery market, threatens restaurants with financial penalties or demotions on its app if they collaborate with Uber’s delivery services.

Uber argues that these tactics hinder competition and force restaurants into exclusive or near-exclusive contracts, particularly for first-party delivery services. Here’s what we know about the lawsuit and what it could mean for the food delivery industry.

Allegations Against DoorDash

According to Uber, DoorDash engages in the following anti-competitive behaviors:

• Exclusive First-Party Delivery Agreements: Uber claims DoorDash pressures restaurants to solely use DoorDash Drive for orders placed through the restaurants’ own websites and apps, limiting competition.
• Threats and Financial Penalties: Restaurants that attempt to use Uber Direct, Uber’s competing first-party delivery service, allegedly face higher rates, demotions, or even removal from the DoorDash platform.
• Market Domination Tactics: Uber claims that over 90% of major restaurant chains in the U.S. rely on DoorDash for first-party deliveries due to these restrictive agreements.

DoorDash’s Response

In a statement to TechCrunch, a DoorDash spokesperson dismissed Uber’s lawsuit, calling the claims unfounded and meritless. DoorDash argues that Uber simply fails to offer a competitive alternative and that its merchants, couriers, and consumers prefer their platform because of the superior service they provide.

The Battle for White-Label Delivery

Both Uber and DoorDash launched white-label delivery services in 2020:

• Uber Direct – Uber’s first-party delivery service, allowing restaurants to use Uber couriers while handling orders through their own platforms.
• DoorDash Drive – A similar service from DoorDash that provides delivery fulfillment without customers using the DoorDash app.

Uber contends that DoorDash’s dominance in the enterprise restaurant sector has left Uber Direct struggling to gain traction. It claims many restaurants feel trapped, with some describing the situation as having a “gun to their head”, with no choice but to comply with DoorDash’s conditions.

Impact on the Industry

If Uber succeeds in its lawsuit, it could set a major precedent for competition in the food delivery space. Key implications include:

• More Freedom for Restaurants: Businesses could have greater flexibility in choosing delivery partners without fear of penalties.
• Potential Pricing Changes: DoorDash may need to reconsider its business model to remain competitive.
• Increased Regulatory Scrutiny: Lawmakers and regulators may take a closer look at the power dynamics in the food delivery market.

What’s Next?

Uber has requested a jury trial but has not disclosed the amount in damages it seeks. However, it claims that DoorDash’s practices have cost Uber millions in revenue and significantly slowed the growth of Uber Direct.

This legal battle is far from over, and its outcome could reshape the food delivery industry. For now, restaurants and customers alike will be watching closely as Uber and DoorDash fight for dominance in the competitive world of online food delivery.