It turns out that Grubhub purchased roughly 23,000 domain names to create landing pages for restaurants that used the platform. Well restaurant owners found out what was happening and weren’t too happy about it. News spread fast and before you knew it the LA Times had a story circulating and ruffling feathers on both sides.
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.
(Source – LA Times)
“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.”
At the end of the day it sounds like legally Grubhub is fine, but they’re only fine because they buried some language inside a contract that no restaurant owner likely read. If they had read the contract, they probably would have been not-too-happy about it given that once Grubhub did what they said they could do in the contract it pissed everyone off.
I think Grubhub definitely planned on making a fair amount of money by doing this since it cost them around $230,000 to do it and carried a similar renewal cost which means they definitely expected to (and might have) make millions of dollars with the landing pages.
Is the moral of the story here that restaurant owners should have read the Grubhub contract in more detail, or is it that Grubhub shouldn’t have been so sneaky? I don’t know, but what I do know is there are going to be a lot of restaurant domains expiring and someone’s going to pick them up, and that’s only going to fan the fire. In short – this is only the beginning.
What do you think? Did Grubhub do anything wrong here or is a deal and deal and should the restaurants have read the contract word-for-word? I want to hear from you, comment and let your voice be heard!