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Data-sharing demand for NYC food deliveries spurs suit from DoorDash

New York City says consumers have the ultimate say on how much to share with restaurants that are struggling after a long pandemic year, but DoorDash says the data is its property to shield or sell as it sees fit.

MANHATTAN (CN) — Painting the issue on privacy terms, DoorDash brought a federal complaint Wednesday over New York City's new law requiring third-party food delivery services to share customers’ data with restaurants.

“In an era of heightened concerns about data privacy and identity theft, this compelled disclosure is a shocking and invasive intrusion of consumers’ privacy,” says the complaint, which the San Francisco-based delivery platform brought with attorneys at Gibson Dunn.

New York City’s ordinance is to take effect in December, requiring third-party food apps like DoorDash, GrubHub and Uber Eats to let restaurants access information on the people placing these orders, including their names, telephone numbers, email addresses, delivery addresses and the content of their orders.

Lawmakers who championed the bill say informed data sharing could be a boon to small businesses. At a time when delivery apps did record-breaking business, the restaurants making the food were cut off from their customers due to the risk of in-person dining during the Covid-19 pandemic.

“After such a devastating year for our city’s restaurant industry, this precedent-setting law gives much needed relief to eateries to have better access to customer data and provides strong privacy protections,” the law’s prime sponsor, Democratic Councilman Keith Powers, said in a statement. “Restaurants are the lifeblood of New York’s economy and culture, and I’m proud that the City Council has stood by our local establishments and New York diners.”

But DoorDash says the information-sharing ordinance “imposes virtually no restrictions” on what eateries can do with the data and doesn’t require restaurants to secure customers’ personal information once they receive it.

Apart from the apps themselves, New York City's new law has drawn criticism from the New York Hispanic Chamber of Commerce, Tech: NYC and the Haitian American Caucus — the last of which worried in an AM NY editorial that immigrant could see their data turned over to government agencies or discriminatory groups.

As quoted in the new complaint, the National LGBT Chamber of Commerce wrote to the openly gay City Council Speaker Corey Johnson that the legislation is “particularly problematic for a community that has already faced heightened risk in navigating confidentiality and security in an online environment.”

New York City's law requires that app companies give customers a choice to opt out of data sharing, but consent is assumed if a customer does not opt out when placing an order.

DoorDash meanwhile notes that it offers restaurants "valuable marketing," for a fee. It says customers also have a good reason to entrust their data to "established, respected technology companies like Door Dash," as opposed to the mom-and-pop shops "that do not have similar robust data safety and security protocols.”

Accusing the city of harboring “naked animus toward third-party platforms,” the company claims that the purpose of New York City’s law “is to reduce DoorDash’s profitability — or remove DoorDash from the equation altogether — and to allow restaurants to free-ride on DoorDash’s confidential, commercially valuable data.”

DoorDash calls for the law to be enjoined. It contends that the new law is “an unconstitutional compulsion of speech in violation of the First Amendment, an unconstitutional taking of DoorDash’s valuable commercial information, an unconstitutional impairment of private parties’ contractual bargains, and a flagrant violation of other constitutional rights.”

Nicholas Paolucci, director of public affairs for the New York City Law Department, said the city will be reviewing the 44-page DoorDash complaint but also defended the ordinance.

“The law puts consumers first. It puts them in control of their information when they place orders through these apps,” Paolucci wrote in an email Wednesday afternoon.

DoorDash brought its lawsuit Wednesday in the Southern District of New York, the same venue where it joined Grubhub and Uber Eats less than a week earlier in a separate challenge of the recently extended New York City ordinance passed that capped commissions for delivery services at 15% per order.

Councilman Powers co-sponsored the data-sharing bill with fellow Manhattan lawmakers Helen Rosenthal and Ben Kallos, Diana Ayala of the Bronx and Manhattan, Marj Gjonaj of the Bronx, and Carlos Menchaca from Brooklyn.

Powers, who co-chairs the Progressive Caucus, represents areas of Manhattan including the Upper East Side, Midtown East and Times Square, as well as the Koreatown and Turtle Bay neighborhoods.

Earlier this week, Eric Adams, the Democratic nominee and heavy favorite in city's mayoral race, promised “New York will no longer be anti-business,” during an address at Anthony Scaramucci’s SALT hedge fund conference in Midtown Manhattan on Monday morning.

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