Why DoorDash Is Fighting Demands That It Share More Data

As revelations grow about food delivery companies' abuses of the local restaurants whose food they deliver, municipalities are attempting to force them to share more information about how much revenues are split between the restaurants and deliverers. 

DoorDash and Grubhub are fighting this because, their strategy does appear to be aimed at forcing the restaurants to become financially and operationally subservient to them. JL 

Preetika Rana reports in the Wall Street Journal:

DoorDash is doubling down in its legal battle with New York City, suing the city over a law that would require food-delivery companies to share more data with restaurants. DoorDash and Grubhug are battling with regulators and policy makers over accusing them of being deceptive over how fees are listed to customers and how restaurants are treated, including whether they are listed on sites with their permission. Lawmakers in California recently passed a bill that would require apps to show consumers how much restaurants make on their order.DoorDash Inc. DASH +3.43% is doubling down in its legal battle with New York City, suing the city over a law that would require food-delivery companies to share more data with restaurants. 

It’s the latest legal front in a growing clash between apps and U.S. regulators. 

New York City approved a series of bills aimed at the food-delivery industry over the summer, one of which requires apps to share data such as a customer’s name, phone number, email and delivery address with restaurants that fulfill the person’s order. Some restaurants have pushed for greater access to consumer data, particularly during the Covid-19 pandemic, as they look for ways to reduce their reliance on apps after the health crisis prompted a shift toward delivery. 

In a lawsuit filed in federal court in New York on Wednesday, DoorDash called the requirement “a shocking and invasive intrusion of consumers’ privacy.” The largest food-delivery app by market share in the U.S. argued that the law imposes no restrictions on what restaurants can do with the data, nor outlines requirements on storing and safeguarding it.

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San Francisco-based DoorDash said the law would allow restaurants to use its trade secrets to compete with it. The company said it would be compelled to “modify its services in a way that will result in fewer resources being offered to restaurants, fewer earnings opportunities for delivery couriers, and fewer choices for New York City customers,” according to its legal filing. The law takes effect in December and DoorDash is seeking to block the city from enforcing it.

A New York City representative didn’t immediately respond to a request for comment.

Wednesday’s filing comes days after DoorDash joined with rivals Grubhub Inc. and Uber Technologies Inc. to sue New York City over a different law that imposes a permanent cap on what the apps can charge restaurants. DoorDash and Grubhub also are suing San Francisco over a similar requirement.

Both cities had temporarily capped what apps could charge restaurants as the health crisis crushed in-store dining, but the companies were expecting those requirements to be lifted as lockdown restrictions eased. Temporary commission caps translated to hundreds of millions of dollars in combined revenue lost through July, DoorDash, Grubhub and Uber Eats said while suing New York City last week.

The regulatory snares are complicating the companies’ efforts to become profitable, sustainable businesses after years of hefty losses that have continued despite booming sales during the pandemic.

The companies are battling with regulators and policy makers over other practices, too. Chicago sued Grubhub and DoorDash last month, accusing them of being deceptive over how fees are listed to customers and how restaurants are treated, including whether they are listed on sites with their permission. Lawmakers in California recently passed a bill that would require apps to show consumers how much restaurants make on their order.