Eaten for breakfast
MP warns Amazon must not be allowed to get its ‘mighty claws’ into Deliveroo
AMAZON’S renewed push into the food delivery market was facing mounting opposition last night as critics of a $575m (£450m) deal with Deliveroo voiced concerns about the control it will exercise over the UK business.
Deliveroo, the food delivery company, announced yesterday that Jeff Bezos’s ecommerce empire was the lead investor in a giant $575m funding round, taking the total amount of cash raised by the business to $1.5bn.
The announcement sent shares in rival online food delivery companies such as Just Eat and Takeaway.com tumbling.
Deliveroo said it would use the cash injection to “invest heavily” in its technology, as company founder Will Shu claimed he looks forward to working with Amazon, which he described as a “customer-obsessed organisation”.
However, the investment provoked controversy as Tom Watson MP, deputy leader of the Labour Party, demanded an investigation by the competition watchdog into Amazon’s ploy to get its “mighty claws” on more consumer data.
“Amazon is obsessed with tracking tools, micro-targeted ads, extracting billions through monetising our personal data,” Mr Watson said.
“They want Deliveroo’s tech and data. They don’t just want to know how you eat, what you eat, when you eat. They want to know how best to extract your cash throughout your waking and sleeping hours.”
Amazon did not respond to a request for comment on the claims made by Mr Watson. Deliveroo has now raised $1.53bn in total, aided by existing investors T. Rowe Price, Fidelity and Greenoaks.
While many of those close to the deal were understood to have signed nondisclosure agreements, including investors and senior staff, some of the riders working for Deliveroo also voiced their concern at the impact of the deal with Amazon.
“If Amazon were to get their way we’d have timers counting us down on the app,” one rider wrote on messaging board Reddit.
“Hoping Amazon won’t get any actual decision making within Deliveroo, before you know it we’ll be timed for deliveries and penalties for not meeting targets,” wrote another.
Amazon’s investment comes after it shut the doors to its own food delivery business Amazon Restaurants in the UK in 2018 after just two years. The venture had struggled in a highly competitive market dominated by the likes of Just Eat, Deliveroo and Uber Eats, all of which deliver food to consumers who make orders through smartphone apps.
Analysts are sceptical that Amazon can overthrow Just Eat, which dominates the UK food delivery market.
“Just Eat has something like three to four times more of the market share than Deliveroo and Uber Eats combined in the UK,” said Ian Whittaker, research analyst investment bank Liberum. “Three fifths of their customers are in small towns. These are areas where the economics of Uber Eats and Deliveroo just don’t work so I would say [Just Eat] are in a much better position than they think.”