DoorDash Inc. 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.”
The law requires companies that provide eateries with online order and delivery services to share monthly information with restaurants who request the information on customers who have placed orders, including names, phone numbers and email addresses.
DoorDash filed its lawsuit Wednesday in a Manhattan federal court less than a week after joining Grubhub Inc. and Uber Technologies Inc.’s 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 were up 1.7% at 10:02 a.m.
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.”
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.
The case is DoorDash Inc. v City of New York, 21-cv-7695, U.S. District Court, Southern District of New York.
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