New York residents often have little time to prepare their own meals. Once or twice a week, they have prepared food delivered to their apartment. There are a number of websites and apps for this, which until fairly recently this reporter believed seemed to be in direct competition with each other – as it turns out, they are largely all one and the same.
In early August, Chicago-based food delivery company GrubHub absorbed Boston's Foodler, a company with significant reach in New England, giving it an additional $80 million in gross income this year alone.
On July 31, it announced a strategic partnership with Groupon, and as part of the deal, acquired a significant share in OrderUp, a rival platform that Groupon acquired in 2015, effectively killing it off. On August 3, the relentless GrubHub train acquired its next biggest direct rival, Eat24.
This modus operandi is nothing new for GrubHub. The company caused a stir in 2013 when it merged with Seamless – a fellow tech startup – effectively monopolising the New York market. This move piqued the attention of New York attorney general Eric Schneiderman who, after a myriad of complaints, found the move was not in the favour of either the consumer or smaller rivals.
The end result of this tussle saw Seamless deconstruct agreements of exclusivity that it had previously held with a number of restaurants, allowing these restaurants to feature on a number of alternative platforms. Both Seamless and GrubHub agreed not to use this tactic for a further 18 months, a time frame which has long since passed.
With this most recent purchase of Eat24 complete, GrubHub processes close to 50% of all online food deliveries in the US.
Enter Uber. Late to the party, under its UberEats platform, it has quickly established itself as a worthy competitor. Thanks in part to some cunning pyramid style tactics (free lunch anyone?), it now delivers 20% of hot meals across the US – not bad for three years work.
Until now, the Federal Trade Commission (FTC) seems to have turned a fairly blind eye to GrubHub and its hunger for acquisitions. Its purpose is to stand up for the consumer, preventing anticompetitive mergers and business practices, so that 'both individuals and businesses (get) the benefits of lower prices, higher quality products and services, more choices, and greater innovation.'
It seems that where there was once a level of choice, there is no longer. If GrubHub decides to raise its fees to 20%, what choice do restaurants have but to raise their prices to meet the cost. If they decide to take a portion of tips for themselves, who is there to stop them? In allowing GrubHub to sew up this market, the FTC has shown a continuing willingness to allow tech companies to do as they please – see Facebook's acquisition of Whatsapp, Instagram etc – no matter the cost to the consumer.
As food for thought, what happens when Amazon (currently commanding a sizeable market share of its own) decides that fresh of the back of its $13.7 billion acquisition of Whole Foods, it is really about time that to put an end to GrubHub's market dominance once and for all? What choice will that leave the consumer? Probably only one.
What will the FTC do then? On this form, probably nothing.