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Power

Why Uber's big deal for Grubhub fell out — and a European suitor stepped in

The deal was reportedly nixed due to antitrust concerns, which have shadowed the courtship since it was revealed publicly.

Hands holding donuts

How many ways can the food delivery market be split among companies? Recent moves signal a trend toward consolidation.

Photo: Tu Trinh/Unsplash

The hottest deal in tech isn't happening after all: Uber's acquisition talks with Grubhub have collapsed, and Grubhub instead will merge with European giant Just Eat Takeaway.com.

The Uber deal was reportedly nixed due to antitrust concerns, which shadowed the courtship since it was revealed publicly. Rep. David Cicilline, the top Democrat on the House Judiciary's antitrust subcommittee, called the potential deal "a new low in pandemic profiteering," while a group of Democratic senators asked the FTC and Department of Justice to look into the acquisition, which they claimed would "raise serious competition issues." Based on a Wedbush analysis, a combined Grubhub and Uber Eats would have controlled around 55% of the U.S. restaurant delivery market.

Amid this political uncertainty, Grubhub reportedly wanted Uber to agree to a cash breakup fee, to be paid in the event that the deal didn't go through. Uber was seemingly reluctant to commit — and has now bailed altogether.

Fortunately for the struggling Grubhub, an overseas savior emerged. Grubhub and Just Eat Takeaway.com (which we'll call JET) announced Wednesday that they'll merge in an all-stock deal. JET is itself the product of a merger, with the Dutch Takeaway.com acquiring Britain's Just Eat this year for around $7.4 billion.

Grubhub, which is worth around $5 billion, will finally give the European firm a foothold in the U.S., delivery's second-biggest market. JET's lack of a U.S. presence up to now also means that the deal is unlikely to run afoul of U.S. regulators, who don't have to worry about decreased competition in the American market.

That's not the only reason this deal makes sense. Like Grubhub, JET's primary focus is a marketplace-based model, one that pairs consumers with restaurants that handle their own delivery. Uber Eats, meanwhile, pays its own drivers — a business that Grubhub executives famously said would never "generate significant profits," but were forced to enter in the face of competition from DoorDash, Postmates and Uber Eats.

Should the merger go through, then, a crucial question will be whether Grubhub continues to do its own deliveries (something that JET has also experimented with) or if it retreats to its once-successful marketplace-only model.

Grubhub could also benefit from having an owner that is singularly dedicated to delivering food and one that's been in the game for a long time. Both Just Eat and Takeaway.com were founded in 2000, before Grubhub's 2004 founding and significantly earlier than Uber Eats' 2014 launch.

For Uber, the loss of the deal is a mixed bag. Uber wanted to expand Eats' market share, helping to boost its least-unprofitable segment — and may now struggle to do so. But there could be a silver lining. With Uber under significant financial and regulatory pressures, a complex merger might not have been the best idea right now. Without Grubhub to distract it, Uber can focus on its core business of moving people.

This post was updated with more information about the Just Eat Takeaway.com merger.

Protocol | Fintech

Jack Dorsey is so money: What Tidal and banking do for Square

Teaming up with Jay-Z's music streaming service may seem like a move done for flash, but it's ultimately all about the money (and Cash).

Jay-Z performs at the Tidal-X concert at the Barclays Center in Brooklyn in 2017.

Photo: Theo Wargo/Getty Images

It was a big week for Jack Dorsey, who started by turning heads in Wall Street, and then went Hollywood with an unexpected music-streaming deal.

Dorsey's payments company, Square, announced Monday that it now has an actual bank, Square Financial Services, which just got a charter approved. On Thursday, Dorsey announced Square was taking a majority stake in Tidal, the music-streaming service backed by Jay-Z, for $297 million.

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

Sponsored Content

The future of computing at the edge: an interview with Intel’s Tom Lantzsch

An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel

An interview with Tom Lantzsch

Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation

Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.

In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.

Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.

What are the biggest trends you are seeing with edge computing and IoT?

A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.

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Saul Hudson
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
Politics

As tech companies flee California, some commit to staying

Between chats with Gov. Newsom and homegrown campaigns, not everyone is leaving California.

Don't write off Silicon Valley as a tech hub just yet.

Photo: Elena Pueyo/Getty Images

The departures of companies like Tesla, Oracle and HPE has a lot of people questioning the future of Silicon Valley and California as a tech hub. And while there isn't a great abandonment of the state — yet — it's certainly a subject on tech CEOs' minds as they ponder a post-pandemic future.

  • Gov. Gavin Newsom recently spoke to both Airbnb's Brian Chesky and DoorDash's Tony Xu around their recent IPOs, and part of the conversation was about their futures in the state. "Airbnb is staying in California and I'm staying in California. This is a special place," Chesky said in a tweet, adding he had talked to Newsom about it. (Newsom's team didn't respond to request for comment.)
  • DoorDash's Xu also spoke to Newsom and told Business Insider that he planned to stay put in California despite a recent exodus. "I think it's a reflection that we're all virtual today so your kind of geographic location is less important, but you know, that the policy decisions do matter," Xu said. "And, what we have to do is we have to work together, especially during a pandemic, we have to work together to help businesses grow so that the economy recovers.

Other tech executives, like Twilio's Jeff Lawson, have launched their own campaigns to get tech execs to commit to the Bay Area. (His comments were not inspired by a Newsom phone call.)

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Biz Carson

Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.

Transforming 2021

Blockchain, QR codes and your phone: the race to build vaccine passports

Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.

One day, you might not need to carry that physical passport around, either.

Photo: CommonPass

There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.

Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

People

DoorDash sparks investor feeding frenzy as stock closes up 85% in debut

After pricing its shares at $102 apiece, it ended up closing at $189.

As part of the IPO process, DoorDash had tried to exert a little bit more control over the pricing by running a hybrid auction process.

Photo: DoorDash

Investors clearly showed an appetite for DoorDash shares as the food delivery company started trading on the NYSE on Wednesday.

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Biz Carson

Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.

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