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Are GrubHub and DoorDash the Next Vertical Monopolists?

Gondek, Nick.  Chicago Policy Review (Online); Chicago (Jun 21, 2021).

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the meteoric rise of these firms has dealt a major blow to their ‘partner’ restaurants

While much of the US economy limped through 2020, one sector saw enormous growth: food delivery apps, like Grubhub and DoorDash. Their premise is simple, in exchange for providing a payment platform and delivering the food, these delivery apps take a percentage of the revenue on every sale. Since the apps themselves can leverage an enormous fleet of contracted drivers paired with state-of-the-art algorithms optimizing delivery speed, they can deliver food faster and cheaper. In theory, this is a boon for the COVID-strained restaurant industry. In practice, the meteoric rise of these firms has dealt a major blow to their ‘partner’ restaurants, and their long-run plans for in-house delivery kitchens could finish the job, as Maureen “Moe” Tkacik of the American Economic Liberties project outlines in Rescuing Restaurants: How to Protect Restaurants, Workers, and Communities from Predatory Delivery App Corporations .

As Tkacik explains, the growth of both Grubhub and DoorDash has been characterized by their willingness to use exploitative tactics to coerce restaurants to join and stay on the platform. Grubhub in particular has been accused of ‘cybersquatting’ – buying up URLs with very similar names to local restaurants’ real website URLs, and then leveraging search engine optimization to ensure Grubhub’s links appear first in search results. This ensures that they get a commission on every online order, take-out or delivery, rather than just in-app delivery orders. DoorDash, on the other hand, has been accused of web-scraping and trademark infringement to add menus of entirely unaffiliated restaurants to their service, even hiring call center employees to call in orders posing as customers and having drivers pick them up incognito.

the power these apps wield over the food service economy is already apparent and growing with...