Technology

Chicago sues DoorDash, Grubhub for allegedly deceiving customers

Published

3 years ago

August 27, 2021

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A bike messenger carries a DoorDash bag during a delivery in New York, Wednesday, Dec. 9, 2020.

Michael Nagle | Bloomberg | Getty Images

The City of Chicago filed two sweeping lawsuits against DoorDash and Grubhub for allegedly deceiving customers and using unfair business practices.

The suits echo longstanding claims from restaurant owners that the platforms advertise delivery services for their businesses without their consent and conceal lower prices that restaurants offer directly to customers outside of the platforms.

The city also claims both platforms use a “bait-and-switch” method to attract customers with low delivery fees, only to charge additional ones when they are about to place their order.

In separate statements, both DoorDash and Grubhub called the lawsuits “baseless.”

A DoorDash spokesperson said the company “has stood with the City of Chicago throughout the pandemic, waiving fees for restaurants, providing $500,000 in direct grants, creating strong earning opportunities, and delivering food and other necessities to communities in need.”

In November, DoorDash stopped adding new restaurants that it doesn’t have agreements with to its app. It also said it will remove restaurants that don’t want to be listed within 48 hours of being notified.

Grubhub similarly says it removes listing for non-partner restaurants when asked. It said only a small percentage of such businesses have requested removal. The company said its contracts require restaurants to offer customers at least as favorable prices on its platform as available elsewhere, contrary to the city’s assertion that it conceals lower prices off the platform.

“Every single allegation is categorically wrong and we will aggressively defend our business practices,” a Grubhub spokesperson said in a statement. “We look forward to responding in court and are confident we will prevail.”

The city is seeking to end the alleged misconduct by mandating more transparency, civil penalties and restitution for consumers and restaurants hurt by the alleged practices.

The suits include additional claims specific to each company.

The city alleged that Grubhub deceptively shared telephone numbers for customers to connect with restaurants, but would charge the restaurants a commission for calls placed through those numbers, even when they didn’t result in an order. The city also claimed Grubhub made “imposter websites” for restaurants to unexpectedly lure customers to its own platform.

Grubhub has maintained that its creation of sites for restaurants does not violate laws, though it has ended the practice. The company also changed its phone routing system on Aug. 23 so that calls from customers seeking answers from restaurants not about an existing order will be sent directly to those businesses at no cost.

The suit claims Grubhub’s marketing campaigns promoting local restaurants during the pandemic were deceptive, while it allegedly forced restaurants to extend their contracts and cover promotion costs. It also alleged Grubhub violated Chicago’s 15% emergency cap on commissions that delivery platforms could take from restaurants.

Grubhub denied violating Chicago’s emergency commission cap and denied that its pandemic campaign was deceptive. The company said more than $500,000 that it raised in the campaign went to Chicago restaurants.

The city claimed DoorDash misled customers about how their tips for drivers would be used. This issue has been the subject of a separate lawsuit from the attorney general of the District of Columbia. DoorDash has said it changed its tipping method prior to the D.C. attorney general’s suit. It reached a $2.5 million settlement with his office in November over those claims.

Chicago also alleged DoorDash misleadingly labeled a $1.50 fee placed on every order as a “Chicago Fee.” The city claimed this wrongly implied the fee was required by or paid to Chicago rather than DoorDash.

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Technology

Intuit shares drop as quarterly forecast misses estimates due to delayed revenue

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3 hours ago

November 21, 2024

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Intuit shares drop as quarterly forecast misses estimates due to delayed revenue

Intuit CEO Sasan Goodarzi speaks at the opening night of the Intuit Dome in Los Angeles on Aug. 15, 2024.

Rodin Eckenroth | Filmmagic | Getty Images

Intuit shares fell 6% in extended trading Thursday after the finance software maker issued a revenue forecast for the current quarter that trailed analysts’ estimates due to some sales being delayed.

Here’s how the company performed in comparison with LSEG consensus:

Earnings per share: $2.50 adjusted vs. $2.35 expected
Revenue: $3.28 billion vs. $3.14 billion

Revenue increased 10% year over year in the quarter, which ended Oct. 31, according to a statement. Net income fell to $197 million, or 70 cents per share, from $241 million, or 85 cents per share, a year ago.

While results for the fiscal first quarter topped estimates, second-quarter guidance was light. Intuit said it anticipates a single-digit decline in revenue from the consumer segment because of promotional changes for the TurboTax desktop software in retail environments. While that will affect revenue timing, it won’t have any impact on the full 2025 fiscal year.

Intuit called for second-quarter earnings of $2.55 to $2.61 per share, with $3.81 billion to $3.85 billion in revenue. The consensus from LSEG was $3.20 per share and $3.87 billion in revenue.

For the full year, Intuit expects $19.16 to $19.36 in adjusted earnings per share on $18.16 billion to $18.35 billion in revenue. That implies revenue growth of between 12% and 13%. Analysts polled by LSEG were looking for $19.33 in adjusted earnings per share and $18.26 billion in revenue.

Revenue from Intuit’s global business solutions group came in at $2.5 billion in the first quarter. The figure was up 9% and in line with estimates, according to StreetAccount. Formerly known as the small business and self-employed segment, the group includes Mailchimp, QuickBooks, small business financing and merchant payment processing.

“We are seeing good progress serving mid-market customers in MailChimp, but are seeing higher churn from smaller customers,” Sandeep Aujla, Intuit’s finance chief, said on a conference call with analysts. “We are addressing this by making product enhancements and driving feature discoverability and adoption to improve first-time use and customer retention.”

Better outcomes are a few quarters away, Aujla said.

CreditKarma revenue came in at $524 million, above StreetAccount’s $430 million consensus.

At Thursday’s close, Intuit shares were up about 9% so far in 2024, while the S&P 500 has gained almost 25% in the same period.

On Tuesday Intuit shares slipped 5% after The Washington Post said President-elect Donald Trump’s proposed “Department of Government Efficiency” had discussed developing a mobile app for federal income tax filing. But a mobile app for submitting returns from Intuit is “already available to all Americans,” CEO Sasan Goodarzi told CNBC’s Jon Fortt.

Goodarzi said on CNBC that he’s personally communicating with leaders of the incoming presidential administration.

On the earnings call, Goodarzi sounded optimistic about the economy.

“Our belief, which is not baked into our guidance, is that we will see an improved environment as we look ahead in 2025, particularly just with some of the things that I mentioned earlier around just interest rates, jobs, the regulatory environment,” he said. “These things have a real burden on businesses. And we believe that a better future is to come.”

WATCH: H&R Block, Intuit shares fall after report Trump administration is considering a free tax-filing app

H&R Block, Intuit shares fall after report Trump admin considering a free tax-filing app

Technology

Bluesky CEO Jay Graber says X rival is ‘billionaire proof’

Published

6 hours ago

November 21, 2024

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Bluesky CEO Jay Graber says X rival is 'billionaire proof'

Bluesky has surged in popularity since the presidential election earlier this month, suddenly becoming a competitor to Elon Musk’s X and Meta’s Threads. But CEO Jay Graber has some cautionary words for potential acquirers: Bluesky is “billionaire proof.”

In an interview on Thursday with CNBC’s “Money Movers,” Graber said Bluesky’s open design is intended to give users the option of leaving the service with all of their followers, which could thwart potential acquisition efforts.

“The billionaire proof is in the way everything is designed, and so if someone bought or if the Bluesky company went down, everything is open source,” Graber said. “What happened to Twitter couldn’t happen to us in the same ways, because you would always have the option to immediately move without having to start over.”

Graber was referring to the way millions of users left Twitter, now X, after Musk purchased the company in 2022. Bluesky now has over 21 million users, still dwarfed by X and Threads, which Facebook’s parent debuted in July 2023.

X and Meta didn’t immediately respond to requests for comment.

Threads has roughly 275 million monthly users, Meta CEO Mark Zuckerberg said in October. Although Musk said in May that X has 600 million monthly users, market intelligence firm Sensor Tower estimates 318 million monthly users as of October.

Bluesky was created in 2019 as an internal Twitter project during Jack Dorsey’s second stint as CEO, and became an independent public benefit corporation in 2022. In May of this year, Dorsey said he is no longer a member of Bluesky’s board.

“In 2019, Jack had a vision for something better for social media, and so that’s why he chose me to build this, and we’re really thankful for him for setting this up, and we’ve continued to carry this out,” said Graber, who previously founded Happening, a social network focused on events. “We’re building an open-source social network that anyone can take into their own hands and build on, and it’s something that is radically different from anything that’s been done in social media before. Nobody’s been this open, this transparent and put this much control in the users hands.”

Part of Bluesky’s business plan involves offering subscriptions that would let users access special features, Graber noted. She also said that Bluesky will add more services for third-party coders as part of the startup’s “developer ecosystem.”

Graber said Bluesky has ruled out the possibility of letting advertisers send algorithmically recommended ads to users.

“There’s a lot on the road map, and I’ll tell you what we’re not going to do for monetization,” Graber said. “We’re not going to build an algorithm that just shoves ads at you, locking users in. That’s not our model.”

Bluesky has previously experienced major growth spurts. In September, it added 2 million users following X’s suspension in Brazil over content moderation policy violations in the country and related legal matters.

In October, Bluesky announced that it raised $15 million in a funding round led by Blockchain Capital. The company has raised a total of $36 million, according to Pitchbook.

Technology

Alphabet shares slide 6% following DOJ push for Google to divest Chrome

Published

7 hours ago

November 21, 2024

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Alphabet shares slide 6% following DOJ push for Google to divest Chrome

Jaque Silva | Nurphoto | Getty Images

Alphabet shares slid 6% Thursday, following news that the Department of Justice is calling for Google to divest its Chrome browser to put an end to its search monopoly.

The proposed break-up would, according to the DOJ in its Wednesday filing, “permanently stop Google’s control of this critical search access point and allow rival search engines the ability to access the browser that for many users is a gateway to the internet.”

This development is the latest in a years-long, bipartisan antitrust case that found in an August ruling that the search giant held an illegal monopoly in both search and text advertising, violating Section 2 of the Sherman Act.

The potential break-up would include preventing Google from entering into exclusionary agreements with competitors like Apple and Samsung, part of a set of remedies that would last 10 years.

CNBC’s Jennifer Elias contributed to this report.