Uber accused rival food delivery service DoorDash of engaging in anti-competitive practices in a lawsuit filed in California on Friday.
The San Francisco-based company said its closest competitor in the food-delivery market had coerced restaurants into working exclusively with them by threatening to issue penalties or demote restaurants in the DoorDash app.
Uber is seeking unspecified damages and a judgment that would force DoorDash to change its business practices.
“Restaurants across the country have told us that DoorDash’s bullying tactics leave them with an impossible choice: cave to their demands or pay the price,” said Sarfraz Maredia, head of Americas at Uber Eats.
“We’re taking legal action because competition should empower restaurants.”
The lawsuit opens a new front in the battle between the companies for market share in the competitive market for food delivery services that accelerated during the Covid-19 pandemic.
“Uber’s case has no merit,” DoorDash said on Friday. “Their claims are unfounded and based on their inability to offer merchants, consumers, or couriers a quality alternative.”
DoorDash Drive enables restaurants and take away chains to operate their own branded apps and websites but have all delivery logistics handled by DoorDash. Customers are charged a fee per order.
DoorDash launched its so-called first-party service in 2016, while Uber followed suit with its version “Uber Direct” four years later.
Both companies generate a significant portion of their revenue from the services they offer restaurants, including fees for delivery and also advertising on their respective platforms. Uber posted its second full-year profit earlier this month, while DoorDash this week reported its second quarterly profit since going public in 2020.
DoorDash is the largest player in the US food delivery market and has previously said it has about 90 per cent of all major restaurants in the country on its platform.
Uber said that last year, a significant restaurant company “abruptly notified” them that it would not roll out services on the company’s platform for several brands. “This decision resulted directly from DoorDash’s punitive threats to increase its commission rates,” it said in the court filing.
The ride-hailing company claimed DoorDash also threatened to impose “punitive charges” with fees increasing between 10 per cent and 30 per cent if a customer opted to use both company’s services.
DoorDash denies the claims.