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Uber Buying Postmates Is Probably Bad News for Consumers, Drivers, and Restaurants

Uber is buying Postmates in an all-stock deal worth $2.65 billion, the companies announced this morning. This consolidation will likely be good for Uber — the stock rose about 8 percent on market open, based on the news, though at press time it is up about 4 percent — but bad for consumers, drivers, and restaurants for whom greater competition is a good thing.

According to research from the credit card spending analyst Edison Trends cited in the New York Times, the market share for food delivery apps looks like this now:

  • DoorDash – 45 percent
  • Uber Eats/Postmates – 37 percent
  • GrubHub – 17 percent

It was actually a little bit surprising to me to learn that DoorDash is bigger than Uber Eats and Postmates combined.

The fact that four major players are becoming three is inevitably going to cause prices charged to customers to go up and wages paid to drivers to go down. Toggling around the delivery apps searching for the best special will have one less seat in the metaphorical game of musical chairs. Even if Postmates is kept as a separate app, they’re not going to undermine Uber Eats with their specials. Restaurants, too, which already pay large fees to delivery apps, will have even less of a choice.

It’s unlikely that anything is going to change in the immediate term, but a year from now it would be very unsurprising if this is a worst marketplace for eaters, drivers, and restaurants.

Written by Ryan Glasspiegel

Ryan Glasspiegel grew up in Connecticut, graduated from University of Wisconsin-Madison, and lives in Chicago. Before OutKick, he wrote for Sports Illustrated and The Big Lead. He enjoys expensive bourbon and cheap beer.

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