Grubhub is pushing back against allegations of overreach involving restaurants on its platform.
The online newsroom New Food Economy reported last week that Grubhub, the food-delivery service, had registered more than 23,000 domains in mom-and-pop restaurants' names without their consent. New Food Economy cast the move as an attempt to generate greater commission revenue and prevent restaurants from building their own online presences.
After four days of anger from restaurant owners and critics, Grubhub went on the offensive Tuesday. In an email obtained by the Los Angeles Times, Chief Executive Matt Maloney said the allegations were "outright false," insisting that restaurants using its food-delivery platform had explicitly agreed to Web-domain purchases and the creation of websites advertising their businesses.
"We do not set up websites without the permission of a restaurant," Maloney wrote in the email to employees. "We had a very clear provision in every one of our restaurant contracts saying we would provide this service to bring them more orders."
Maloney said Grubhub, which in 2018 discontinued the practice of automatically creating websites for restaurants, charged eateries substantially less for orders received via those websites than for those placed directly within its app, and it turned ownership of the websites over to the restaurants upon their request.
"The allegations are untrue," he wrote. "And those spreading false narratives are being reckless."
Contract language obtained by the Los Angeles Times appears to support some of Maloney's contentions. The second item in the terms of service signed by restaurant owners states that Grubhub "may create, maintain and operate a microsite ("MS") and obtain the URL for such MS on restaurant's behalf."
Grubhub said the line in its terms of service authorizing the creation of the microsites was on an opt-out basis, meaning restaurants could choose to reject or negotiate the provision. But Stacy Mitchell, co-director of the Institute for Local Self-Reliance, said it's unlikely that restaurants were aware they had the ability to negotiate terms with a platform like Grubhub.
"If you even read these conditions, your assumption is going to be that this is a take it or leave it deal," she said.
These issues have become endemic across the digital economy, according to Mitchell, who said the power imbalance between large tech platforms and the small businesses that use them means that contracts are rarely set on equal terms.
"The terms of service have become a way for these large companies to establish and justify an exploitative relationship," Mitchell said. "They're typically something that is take it or leave it. If you don't take it, you're locked out of half the market."
Business on 07/04/2019