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Facing fury over 'fake websites,' Grubhub says restaurants have it wrong

James B. Cutchin, Los Angeles Times on

Published in Science & Technology News

It looked like yet another example of Big Tech's overreach, a David-and-Goliath story pitting a massive internet platform against powerless individuals.

These were the facts: Grubhub, the food delivery firm, was buying up web domains named after mom-and-pop restaurants and using them to drive its own business.

But it wasn't quite so cut and dried.

The outcry began Friday when the New Food Economy reported Grubhub had registered more than 23,000 domains in restaurants' names without their consent in what the New Food Economy cast as an attempt to generate greater commission revenue and prevent restaurants from building their own online presences.

After enduring four days of outrage from restaurant owners and critics, Grubhub went on the offensive on Tuesday. In an email obtained by The Times, Chief Executive Matt Maloney said the allegations were "outright false," insisting that restaurants using its food delivery platform had explicitly agreed to web domain purchases and the creation of websites advertising their businesses.

"We do not set up websites without the permission of a restaurant," Maloney wrote in the email to employees. "We had a very clear provision in every one of our restaurant contracts saying we would provide this service to bring them more orders."

 

Maloney also said Grubhub, which discontinued the practice of automatically creating websites for restaurants in 2018, charged restaurants substantially less for orders received via those websites than for those placed directly within its app, and turned ownership of the websites over to the restaurants upon their request.

"The allegations are untrue," he wrote. "And those spreading false narratives are being reckless."

Contract language obtained by The Times appears to support some of Maloney's contentions. The second item in terms of service signed by restaurant owners states that Grubhub "may create, maintain and operate a microsite ("MS") and obtain the URL for such MS on restaurant's behalf."

If Grubhub's actions were interpreted as a sinister power grab, it may be a result of broader concerns by small businesses that find themselves increasingly at the mercy of huge internet platforms with the power to commandeer their customer relationships and skim their profits.

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