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The four-way war over food delivery

Pizza

Good morning! This Tuesday, what the food delivery commission caps mean, Facebook and others reimplement mask mandates, and Google is making its own chips.

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The Big Story

Want a burrito delivered? That'll cost you.

Food delivery can seem magical: Press a button, and there's a pizza at your door. But behind the scenes, that transaction has turned into an all-out war between cities, delivery companies, mom-and-pop restaurants and delivery drivers who are fighting each other over every single dollar.

The love triangle between the companies, restaurants and drivers was already complicated — then the government intervened. In spring 2020, cities rushed to pass emergency commission caps to limit the amount that delivery companies could siphon off of a delivery order.

  • It was supposed to be a helpful measure to protect small restaurants from being cannibalized by Big Delivery at a time when they had to close all in-person dining operations. The caps passed by the cities limited the amount that companies like Uber Eats and DoorDash could take from the orders, like a 15% limit in New York City.
  • Let's just say it didn't go over well with the delivery companies, who felt like the government was overstepping in imposing price controls. In response, companies went on a petition spree, cut off some delivery zones and added extra charges to cover the gap. (My Chinese food order the other night came with a $5 service fee, a $2 delivery fee, and a $2 California benefits fee thanks to another legislative headache: Proposition 22.)

Now cities want to make those caps permanent, and it's back in the ring for another fight.

  • DoorDash and Grubhub are suing San Francisco after it became the first city to pass a permanent cap at 15% in June, calling the price controls "unprecedented and a dangerous overreach by the government."
  • New York's City Council passed an extension on its delivery cap to February 2022, and is mulling over a permanent commission cap in the country's largest food delivery market. Also on the menu: new bills that would have delivery companies hand over customer information like their address and phone numbers to restaurants when they request it.
  • DoorDash and Uber Eats may hate the caps, but it's hard to say that these caps are devastating their businesses. The overall food market has only grown since the pandemic, and sales are up 20% year-over-year, according to Bloomberg's Second Measure.
  • After a year and a half of restaurants coping with limited indoor seating and struggling with a labor shortage, it's hard to argue that the delivery companies should be taking more. "The reality is, emergency or not, we really have an imperative to protect independent restaurants from the exploitative and predatory practices of third-party food delivery apps that seek to extract wealth from our local economy, harming our commercial corridors, and harming workers throughout the Bay Area," said SF Supervisor Aaron Peskin in June.

The hard part: Nobody really wins. Drivers are still striking over low wages. Restaurants are still closing. The caps are costing food delivery companies millions. Diners are paying more than ever in fees. Then the cycle repeats, as higher prices lessen consumer demand leading to decreased revenue for restaurants and the delivery drivers.

Now that the caps are becoming permanent, there's one thing that's clear: Your late-night burrito delivery won't be getting any cheaper anytime soon. Sorry to be the one to break the news.

— Biz Carson (email | twitter)

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People Are Talking

A state-run newspaper in China took a swing at the gaming industry in a since-deleted article, causing panic from Tencent and others:

  • "'Spiritual opium' has grown into an industry worth hundreds of billions ... No industry, no sport, can be allowed to develop in a way that will destroy a generation."

Theranos patient testimony is key in Elizabeth Holmes' trial, attorney Jason Mehta says:

  • "The most powerful evidence often comes from patients themselves."

On Protocol | Policy: The DNC wants engineer Arthur Thompson to keep voter information in check:

  • "I hope to leverage my experience scaling teams and technology to continue to build on the DNC's successes and empower the reach of progressive leaders all across the country."
Crypto regulation is like traffic lights and speed limits, SEC Chair Gary Gensler said, and will help the tech go mainstream:
  • "It's only with bringing things inside—and sort of clearly within our public policy goals—that a technology has a chance of broader adoption.

Making Moves

FinAccel, Kredivo's parent company, is going public via SPAC. The company is merging with VPC Impact Acquisition Holdings in a deal valued at $2.5 billion.

PolicyBazaar is looking to go public. The online insurance aggregator is backed by SoftBank, Tiger Global and a few others.

Sagnik Nandy is Okta's new president of technology and CTO. It's the company's second hire from Google in a month.

Chirag Parikh is the National Space Council's next executive secretary. He currently leads Azure Space at Microsoft.

Edward Liu is ZocDoc's new CFO, and his predecessor will move into another role at the company. Liu previously led tech banking at Morgan Stanley.

In Other News

  • Facebook will reimplement its mask requirement today. This follows similar mandates by Apple, Uber and Lyft, as new COVID-19 variants force companies to rework their back-to-office plans.
  • Chinese regulators are looking into the auto industry. The government said it's investigating chip dealers in particular to prevent price gouging and collusion during a global chip shortage.
  • The European Commission will investigate Facebook for its acquisition of customer relationship management company Kustomer. The commission is mainly looking at whether Facebook's purchase will hurt operations for Kustomer's rivals.
  • Google is building its own smartphone chips. The company is parting with Qualcomm and putting Tensor chips into the next Pixel. The chips are designed for machine learning and AI, rather than raw processing speed.
  • Amazon workers might get another chance to unionize. The National Labor Relations Board recommended the Bessemer election be redone, determining that Amazon acted unlawfully in the first election.
  • Amazon is keeping a very close eye on its drivers. Since placing cameras in delivery vans earlier this year, the company began alerting drivers for infractions ranging from tailgating to illegal U-turns, according to The Information. Some of those infractions cost delivery companies their contracts with Amazon.
  • Twitter will pay you to find bias in its AI. The company will offer a cash prize for those who best evaluate and uncover problems with its its image-cropping algorithm.
  • Zoom is paying $85 million to settle a user privacy lawsuit. The company was sued for giving personal information to social media platforms and allowing hackers to Zoombomb meetings.
  • Whole Foods is adding a grocery delivery fee. Prime customers in six different cities will soon have to pay roughly $10 more for food deliveries to offset operating costs.

One More Thing

How to carry a digital vaccination card

Lots of places, from bars to your own office, are starting to require proof that you've been vaccinated. But instead of trying to stuff your vaccination card in your wallet (it's not you, it really doesn't fit) or wearing it on a lanyard around your neck, there are digital ways you can show your vaccination status.

For people in England, the NHS app stores your COVID-19 pass. If you're traveling, CommonPass can check your vaccination status and test results to verify whether you're OK to leave the country. If you live in New York, you could download the Excelsior Pass, which keeps an online record of your vaccination status. California also has an official way to download your vaccine card to your Apple Wallet or to your Android phone, so you never have to worry about how to carry that awkward vaccination paper card again.

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