In a development that would expand the company's power in the food delivery app market, Uber announced Monday it agreed to acquire startup Postmates—prompting concern from anti-monopoly experts over the acquisition's threats to restaurants and delivery workers.
The boards of directors of Uber and Postmates have already signed off on the $2.65 billion all-stock transaction. The companies claimed in a joint statement that the deal would give customers "expanded choice" and delivery workers "more opportunities to earn income." The acquisition now faces regulatory review.
If approved, the Uber-Postmates joint venture would control a 37% share of food delivery sales in the U.S., putting it behind first place DoorDash at 45% and ahead of Grubhub at 17% share, the New York Times reported.
That playing field drew concern from the Open Markets Institute, which said "an oligopoly" of UberEats/Postmates, Grubhub, and DoorDash would control 99% of the food delivery app market, adding that the companies have engaged in "predatory behavior."
The group said the prospective merger raises Clayton Act concerns, referring to the legislation that bars acquisitions that stand to "substantially ...lessen competition, or to tend to create a monopoly."
As Gizmodo previously reported, Postmates, DoorDash, Uber Eats, and Grubhub were slapped with a class action lawsuit in April.
The complaint states that the companies are able to dictate pricing through the platform by imposing "unlawful" clauses against price competition
Additionally, the suit took aim at exploitative labor practices enabled by the gig economy and the delusional claim by these companies to their investors that eventually, the delivery drones of their wildest dreams will replace human workers who require actual pay—however meager—and who are driving up costs in the meantime.
The new statement from Open Markets says Uber will likely expand its market share even further, as it "deploys the myriad of anti-competitive tools at its disposal as a dominant tech platform."
SCROLL TO CONTINUE WITH CONTENT
Never Miss a Beat.
Get our best delivered to your inbox.
The ultimate goal of the apps has always been clear, said Claire Kelloway, food researcher at Open Markets.
"These destructive delivery apps were not built to help restaurants, provide secure jobs, or even properly deliver food – they were built to monopolize an essential service and reap profits for investors," she said.
According to Kelloway, "To support small enterprising restaurateurs, protect workers, and rebuild vibrant main streets, enforcers need to stop Uber's domination game and block this deal."
Food delivery apps charge restaurants exorbitant fees––making it hard for them to survive, especially under the weight of the pandemic. Uber's acquisition of Postmates is only going to make that worse. @clairekelloway https://t.co/Mdv754sVhT— Demand Progress (@demandprogress) July 6, 2020
The acquisition announcement also drew the attention of Stacy Mitchell, co-director of the Institute for Local Self-Reliance, who pointed to a potential consequence on delivery workers:
If Uber is allowed to buy Postmates, driver pay will likely go down even more, reports @theinformation: “the delivery app’s long term costs associated with attracting delivery couriers will go down because fewer apps will be competing for them."— Stacy Mitchell (@stacyfmitchell) July 6, 2020
Monopoly is bad for workers.
The proposed acquisition is simply "bad news," wrote journalist Wilfred Chan, identifying himself in a Monday Twitter thread as a "as a part-time courier who works for both" Uber and Postmates.
"While both are staunch anti-worker companies, fewer and bigger players means even less worker leverage against platform capitalists," he wrote, warning that "with dwindling options, we'll be exploited even more harshly."