DoorDash Is Fighting Monopoly Accusations… by Becoming an Even Bigger Monopoly

Well, it seems like DoorDash is taking a break from their court brawl with Uber (where they're being accused of coercing restaurants with threats to only use their app for food delivery and basically running an unethical monopoly) to ironically spend $3.6 billion buying another food delivery company. Actually, pretty hilarious if you think about it.

The company in their shopping cart this time is Deliveroo… the British-based food delivery service that famously faceplanted during its 2021 IPO, earning itself the flattering nickname Floperoo among London investors. Deliveroo’s stock never really recovered. After years of wobbling around like a drunk golfer on the last 9 holes, it finally clawed its way to posting a tiny profit this year (about $15.3 million) which, to be fair, is a minor miracle in the world of food delivery.

For DoorDash, the timing couldn’t have been better. Instead of slowly building operations across Europe and Asia (which would cost billions and likely take longer than explaining tik tok trends to your parents) they can simply hand over $3.6 billion and instantly set up shop in Deliveroo’s key markets… the U.K., France, Italy, Belgium, Ireland, Singapore, and Qatar.

Of course, this all comes while DoorDash is still tied up in a nasty lawsuit with Uber back home. Uber alleges that DoorDash uses “coercive” tactics against restaurants, including threatening them with massive penalties and pushing them into lower visibility on the app if they don’t agree to exclusive or near-exclusive contracts. In other words, Uber’s accusing them of being like the mafia, but instead of breaking kneecaps, they’re just making sure you can’t find your favorite taco place unless you scroll through twenty sponsored ads first. DoorDash, naturally, denies everything and claims that Uber is just throwing legal spaghetti at the wall because they’re losing customers the old-fashioned way… by not being as good.

Adding another layer of absurdity to the situation, DoorDash is arguing that Uber’s lawsuit isn’t even based on proper antitrust laws, but rather on a California law typically used for employee non-compete clauses.

From a regulatory perspective, the Deliveroo buyout probably won’t be blocked. Analysts pointed out that there’s barely any overlap between the two companies… Deliveroo’s strongholds are mostly in Europe and Asia, while DoorDash is busy delivering spicy chicken sandwiches to Americans, Canadians, Australians, and New Zealanders.

Behind all the corporate bickering, the real story is that food delivery is turning into a massive land grab. While Uber continues to play tattle tale, DoorDash is trying to own the ecosystem before their competitors even get a chance to fight back. Buying Deliveroo gives them instant access to established markets without the ugly startup costs, while also making sure Uber, Just Eat, and Delivery Hero have fewer places to hide.

And for Deliveroo, well it gets to walk away from years of painful public markets with a pretty decent exit. Sure, it’s nowhere near the $7-8 billion valuation they were dreaming about back in 2021, but at least they’re not slowly fading into irrelevance. (if your stock peaked at $5.00 and has been limping along at $2.30, you take the $3.6 billion buyout and pretend it was your plan all along.)

The funniest part of all this is that DoorDash can now claim it’s “expanding customer choice” while actively shrinking the number of major players in the food delivery market.

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Stock.News has positions in Uber.