Uber Takes DoorDash to Court Over Alleged ‘Coercive’ Restaurant Tactics

Uber is accusing DoorDash of “coercive” behavior in a new lawsuit against its delivery rival.

The suit, as reported Friday (Feb. 14) by The Wall Street Journal (WSJ), alleges that DoorDash pushes restaurants to work exclusively with its delivery service, threatening higher commission rates for establishments that also use Uber Eats.

“DoorDash’s coercive tactics reduce restaurant-customer and consumer choice, resulting in higher prices, lower-quality service, and decreased innovation,” Uber said in the filing, per the WSJ report.

DoorDash told the media outlet that other restaurants have returned to its service after trying alternatives, and that Uber’s case had no merit.

“Their claims are unfounded and based on their inability to offer merchants, consumers, or couriers a quality alternative,” the company said.

According to WSJ, the complaint alleges that Uber had on more than one occasion provided direct delivery services to restaurants until DoorDash stepped in.

In one case, the suit alleges, a large restaurant company suddenly canceled long-running plans to have Uber offer direct delivery services once DoorDash said it would raise commissions for handling the restaurant group’s marketplace orders.

The suit also says DoorDash had threatened to hike commission rates on another restaurant by 30% for each marketplace order, and claimed that working with Uber would cost restaurants tens of millions of dollars in added DoorDash fees. Uber said this led it to lose millions of dollars in business.

As the WSJ report notes, companies like DoorDash flourished during the pandemic, but many companies have struggled to generate revenue since then. Last year, Grubhub was sold by owner Just Eat Takeaway for a fraction of its original purchase price.

The report, citing numbers from data firm Earnest Analytics, said that DoorDash commanded a 63% share of the national delivery market last year, followed by Uber at 25% and Grubhub at 6%.

The news comes days after DoorDash released quarterly earnings showing a growing number of consumers ordering from both its restaurant and retail partners.

As of December of last year, 25% of the company’s monthly active users were placing orders with retailers that included grocers, health and beauty suppliers and home improvement stores.

“The utility that comes from great digital experiences and a high-quality last-mile logistics network that can deliver goods from every merchant in your community — as perishable as ice cream or french fries, as delicate as orchids or crickets, as bulky as mulch or lawnmowers, as valuable as iPads or big screen TVs — has increasing usefulness and enduring value,” DoorDash co-founder and CEO Tony Xu wrote in a shareholder letter.

Meanwhile, Uber recently reported a surge in its Uber One membership program, which added 5 million users during the most recent quarter, bringing total members to 30 million.