Privacy violated, deliverer alleges

NYC law spurs DoorDash to sue

DoorDash sued New York City over a law that forces third-party food delivery services to share customer information, in what the company says is a "shocking and invasive intrusion of consumers' privacy."

Under the law, delivery companies must share data collected on customers -- including names, addresses, phone numbers, email addresses and order contents -- with any restaurant that requests that information. Customers can opt out and keep their information private, but only on an order-by-order basis.

DoorDash filed its lawsuit Wednesday in a Manhattan federal court less than a week after joining Grubhub and Uber Eats in a suit over a 15% limit the city placed on commissions charged by delivery services. In the earlier complaint, the companies said the law is "nothing more than unconstitutional, harmful, and unnecessary government overreach that should be struck down."

The measures imposed by the city are part of a package of bills aimed at regulating the food-delivery industry, which faced scrutiny during the pandemic as their business skyrocketed when restaurants were forced to close their dining rooms.

Shares of DoorDash closed up 3% in New York.

In the latest suit, DoorDash says the information-sharing law "imposes virtually no restrictions" on what restaurants can do with the data and doesn't require eateries to secure the information once they receive it.

DoorDash said the law undermines the privacy of city residents who trust companies like it with "sensitive personal data that they would not entrust to small businesses that do not have similar robust data safety and security protocols."

When diners go to restaurants in person, they don't expect to have to disclose "the kind of sensitive personal information that the ordinance requires DoorDash to disclose," the company said. "Customers will face a serious risk of harm from their personal data being shared with every restaurant that fulfills their order on DoorDash's platform."

"In an era of heightened concerns about data privacy and identity theft, this compelled disclosure is a shocking and invasive intrusion of consumers' privacy," the lawsuit says.

But many restaurants -- which have complained about delivery fees and lack of transparency -- supported the bill. The NYC Hospitality Alliance, which represents 25,000 bars and restaurants in New York, says the bill ensures that restaurants can market directly to their customers. The law also makes it easier for restaurants to leave delivery platforms without losing access to their customers.

"DoorDash spends millions of dollars to take restaurants' customers and withhold their information so they can control the market and extract more fees from small businesses," said Andrew Rigie, the executive director of the alliance.

DoorDash is asking a federal judge to issue an order blocking the bill from going into effect, saying it was enacted to reduce DoorDash's profitability and "to allow restaurants to free-ride on DoorDash's confidential, commercially valuable data."

The company said the city's ordinance is likely to backfire.

"Restaurants will use DoorDash's trade secret data to compete directly with DoorDash, forcing DoorDash to modify its services in a way that will result in fewer resources being offered to restaurants, fewer earnings opportunities for delivery couriers, and fewer choices for New York City customers."

The city's Law Department didn't immediately respond to emails seeking comment on the suit.

Delivery companies saw big sales gains over the past year as pandemic lockdowns closed restaurant dining rooms and more people ate at home. DoorDash booked a record 345 million orders in its most-recent quarter, and its sales jumped 83% from the the year before to $1.24 billion.

Delivery companies say they help restaurants by connecting them to diners and handling tricky logistics. But their commission fees, which can be as high as 30% per order, have cut into the already thin margins of restaurant owners in an unprecedented era. The National Restaurant Association estimates 90,000 U.S. restaurants have closed permanently or long-term because of the pandemic.

Information for this article was contributed by Chris Dolmetsch of Bloomberg News (WPNS) and by Dee-Ann Durbin of The Associated Press.

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