California takes on the internet (again) with bill aimed at food-delivery abuses
The state is increasingly trying to regulate the digital economy, with direct and indirect impacts for marketers.
In May 2019, Google added order online buttons to Google My Business (GMB) restaurant profiles and knowledge panels through partnerships with Grubhub, DoorDash, Postmates, Delivery.com and others. This was part of GMB’s broader evolution, from a static directory to an increasingly “transactional” platform.
It was convenient for consumers (and the delivery apps) but created problems for many restaurants. So California decided to step in with a new bill (AB 2149) that aims to “protect restaurants from being undercut by food delivery platforms, such as DoorDash, Grub Hub, Postmates and Uber Eats, that make it impossible to build strong customer relationships.”
Going after DoorDash et al. The GMB order online call-to-action was implemented without authorization from the restaurant’s, resulting in traffic being siphoned off and compelling restaurants to pay delivery fees to third parties. Delivery apps, under intensifying competitive pressure, have also added restaurants to their directories and rosters without permission from the business itself.
From one perspective, the delivery app disrupts the direct relationship between the consumer and the restaurant. There has also been other ethically dubious conduct by some delivery apps, resulting in lawsuits. And after many complaints from restaurants and SEOs (on behalf of clients) last year, Google added an opt-out form for food ordering. But California still felt it needed to take action.
Forced information sharing. If passed, AB 2149 would by require delivery apps to share customer information with restaurants, to provide the restaurant with customer data. It would also prohibit restaurants from being presented on delivery apps without an explicit agreement, according to the bill’s author, California Assemblywoman Lorena Gonzalez.
The proposed law is aimed at redressing the perceived power imbalance between independent, small restaurants and “big tech.” This is conceptually similar to Gonzalez’s previous bill, the recently enacted and highly controversial AB 5, which explicitly sought to rein in the “gig economy” (read: Uber and Lyft) and turn independent contractors into employees. However, it has had a number of unintended consequences.
AB 5 went into effect on the same day as the California Consumer Privacy Act (CCPA), which aims to protect consumer data against perceived exploitation and abuses by large tech firms.
Why we care. Despite the fact that many of the major technology companies are based in California, the state’s legislature is increasingly acting when it sees what it believes is unfairness. AB 5 was passed to address the “exploitation” of contractors by Uber and Lyft. And AB 2149 is trying to do something similar for small restaurants.
The legislative consensus in California appears to be: large technology firms can no longer be trusted to do the right thing. Gone is the hands-off approach that prevailed in the early days of the internet. With the federal government effectively paralyzed, California is attempting to regulate “big tech” and passing laws that have potential nationwide impact on marketers (e.g., CCPA). In some cases it’s creating a template for other states to follow.
Marketers across the country will need to keep an eye on what’s happening in California because the state will continue to pass laws — in the absence of federal regulation — that will impact the digital economy and the regulatory burdens companies face going forward.