Class Actions Against Grubhub and DoorDash Expose Dominant Delivery Apps’ Coercive Game Plan
Washington, D.C. — The American Economic Liberties Project on behalf of Protect Our Restaurants, a coalition fighting to break the power of dominant delivery apps, released the following statement in response to news that restaurants have initiated a potential class-action lawsuit against GrubHub for allegedly listing 150,000 restaurants to its site without the businesses’ permission, which follows a similar suit filedagainst DoorDash.
“The widespread delivery app practice of promoting unauthorized delivery services to non-partner restaurants, recently banned in California by Gov. Gavin Newsom, is designed to cause restaurants so much confusion and customer dissatisfaction that they concede to officially “partnering” with—and by extension, paying 30% minimum commissions to—Grubhub and Doordash. It also deprives restaurants of their bargaining power with the apps, which have repeatedly refused to negotiate discounted commissions with large groups of restaurants because the ability to offer unauthorized deliveries shields them from the consequences of restaurants who attempt to go on “strike” against the apps,” said Moe Tkacik, Senior Fellow at the American Economic Liberties Project and author of “Rescuing Restaurants: How to Protect Restaurants, Workers, and Communities from Predatory Delivery App Corporations.”
“Because of this, millions of Americans ordering takeout to support the beleaguered restaurant industry are inundated with deliberately planted misinformation: fake websites purporting to represent real restaurants but which actually get their food from ghost kitchens; fake order forms for real restaurants that use year-old menus or offer service from restaurants that closed six months ago because they couldn’t afford to fork over 35% of their revenues to delivery apps; fake listings falsely informing internet users that their favorite restaurant is “too far away” or “not accepting orders right now,” said Tkacik.
“This is the price independent restaurants pay for refusing to ‘partner’ with GrubHub, DoorDash and the walled garden of restaurant extortion they have built on the internet,” added Tkacik. “We founded Protect Our Restaurants because restaurants should not have to pay this glorified ‘protection racket’ every time a customer Googles their name, especially during a pandemic that is shuttering hundreds of new independent restaurants every week. We support the restaurants fighting to hold Grubhub and DoorDash accountable and urge the Federal Trade Commission to investigate the deceptive, predatory and anti-competitive implications of this widespread practice.”
Read more about the threat of dominant delivery apps in “Rescuing Restaurants: How to Protect Restaurants, Workers, and Communities from Predatory Delivery App Corporations.”
Economic Liberties works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. AELP believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.