Uber Files A Lawsuit Against Doordash Over Anticompetitive Conduct. 'Underhanded Tactics Have Cost Uber Millions Of Dollars In Revenue' - DoorDash (NASDAQ:DASH), Uber Technologies (NYSE:UBER)

Uber Technologies Inc. UBER has taken legal action against DoorDash Inc. DASH, accusing the latter of anticompetitive practices that have reportedly raised costs for the restaurants as well as the consumers.

What Happened: On Friday, Uber lodged a lawsuit in the California Superior Court in San Francisco. The ride-hailing company alleges that DoorDash has been pressuring restaurants to make it their exclusive or primary delivery service provider, as per a report by The Wall Street Journal.

Uber asserts in the lawsuit, “DoorDash's underhanded tactics have cost Uber millions of dollars in revenue and unlawfully restricted its ability to grow Uber Direct, the Uber Eats platform for first-party delivery,”

In response to the allegations, DoorDash dismissed Uber’s lawsuit as baseless in an email statement to Reuters. The spokesperson stated, “Uber's case has no merit. Their claims are unfounded and based on their inability to offer merchants, consumers, or couriers a quality alternative.”

Why It Matters: The food delivery market in the U.S. is highly competitive with DoorDash commanding the highest market share of over 60%.

This lawsuit comes at a time when DoorDash has been experiencing significant growth. DoorDash’s total orders had increased by 19% year-over-year to 685 million, and its Marketplace Gross Order Value (GOV) had risen by 21% year-over-year to $21.3 billion. The company’s quarterly revenue was reported at $2.87 billion, surpassing the consensus estimate of $2.84 billion.

Meanwhile, in a recent interview with Stratechery, Uber CEO, Dara Khosrowshahi acknowledged ‘it's going to be a dog fight’ with DoorDash and acknowledged them as ‘a strong competitor’. However, Khosrowshahi highlighted the underlying strengths of Uber Eats against DoorDash.

“We're a really strong competitor, and I'm very, very confident that the network effect that we have, Rides, Eats, along with the Uber One Membership program that's now 30 million strong, ultimately is going to come out on top of the full competitive field in food and grocery,” elucidated the CEO.

The lawsuit by Uber could have a potential impact on DoorDash’s growth trajectory and intensify the competition in the food delivery market. Antitrust regulators might step in to stop further consolidation or promote fair competition, potentially benefiting smaller businesses and new players.