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Uber Technologies Inc. is under investigation by the U.S. Federal Trade Commission for a partnership with food-delivery service Gopuff and its acquisition of alcohol delivery service Drizly, according to a report today by The Information.
The investigation, said to have begun at the end of June, is looking at whether the Uber Gopuff partnership, as well as Uber’s acquisition of Drizly, could hamper competition in online sale and delivery. The two probes are said to be separate, but the same FTC team in New York is managing both investigations.
Gopuff, founded in 2013, is a digital delivery service designed to deliver “daily essentials within minutes.” The company, which has $3.4 billion in venture capital funding, according to Crunchbase and counts SoftBank among its investors, signed a deal with Uber in May.
Under the deal, orders for convenience store items ordered through Uber Eats are delivered by Gopuff. The delivery deal started in 95 cities in June, with national expansion due to have taken place in the late summer. Uber pitched the deal as allowing it to “leapfrog the competition in using Gopuff’s network of micro-fulfillment centers to instantly meet consumer demand for thousands of products.”
The combined power of Uber Eats and Gopuff is where the FTC has taken an interest.
Uber acquired Drizly in February in a $1.1 billion deal. Drizly offers alcohol delivery in 1,400 cities across the U.S. and Canada. The company works directly with local beer, wine and spirit merchants to provide thousands of “new, local, well-known and not-so-well products.”
The FTC investigation into Uber’s acquisition of Drizly makes complete sense and is not unusual, since the FTC regularly investigates acquisitions on competition grounds. But the investigation in the Gopuff is somewhat of an oddity.
The Information noted that the investigation into the Uber-Gopuff partnership is a rare instance where regulators are examining a deal that doesn’t involve an acquisition or investment. That’s claimed to reflect the regulator’s increasing willingness to investigate other types of business deals on competition grounds.
It’s further claimed that the overlapping investigations also signal that antitrust regulators are looking to intervene in still-developing industries to avoid mistakes of the past. Those mistakes, at least in the eyes of the FTC, include Google LLC and Facebook Inc. snapping up competitors to cement their market dominance.
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