SB 1490 puts the DRA first
A new proposal in California that claims to help restaurants actually threatens services they value, while also mandating protections for bad-faith third parties. SB 1490 has many well-intentioned proposals, but broad language and ill-defined provisions reveal the true intentions of the bill’s corporate sponsors.
One provision in the bill that bans platforms from restricting use of third parties more concerned with their self-interest than actually helping the restaurants they work with explains why the Digital Restaurant Association–a group backed by notorious Uber founder Travis Kalanick–is sponsoring the bill.
We don’t think California lawmakers should be spending time helping billionaires and billion-dollar companies get richer.
“Digital Restaurant Association” is an astroturf organization funded by Uber founder Travis Kalanick
- The Delaware Valley Journal reported, “On the surface, the Digital Restaurant Association seems innocuous, [yet] everyone listed as either a current or former DRA official has also been affiliated with Tusk Strategies.”
- The Financial Times reported in 2022 that Digital Restaurant Association “was currently ‘fully operated and funded’ by Tusk Holdings…a lobbying firm founded by Bradley Tusk, an early Uber investor and former adviser who spearheaded efforts by the ride-hailing app founded by Kalanick to bat away regulation in New York City.”
- In an exposé in Semafor, the DRA’s “sneaky” lobbying efforts were called into question with the observation that “some lawmakers undoubtedly think they are trying to help small businesses and consumers, only to find out the effort is tied to Kalanick and a $15 billion startup.”
- An executive at Kalanick’s new company, City Storage Systems, was listed on the Digital Restaurant Association’s board of directors. He was removed after the connections were first mentioned in the Financial Times.
- As the California Black Chamber of Commerce said in their opposition to the bill, “The last thing our membership needs is an out-of-state group coming in and imposing new laws that don’t serve their best interests”
The bill’s provisions value third parties – like Kalanick’s new startup – over restaurants themselves
- As part of Kalanick’s umbrella of companies under City Storage Systems, he has founded the startup service Otter, which helps restaurants manage orders from several food apps at once.
- In mid-June 2023, DRA advertised membership in the association without any fees for 2023 – an indicator of trying to use restaurants as cover for Otter’s mission.
- By providing open-door access for third-parties to manage restaurant accounts, this bill also risks eliminating basic protections that platforms might impose on third parties, jeopardizing account information and risking the security of technology systems.
- Under SB 1490, platforms would not be allowed to require something as simple as mandating that third parties act in the best interest of restaurants rather than their own self-interest.
SB 1490 threatens to eliminate services restaurants value
- The bill includes a provision that prohibits platforms from “penalizing” restaurants for refusing to use a service offered by the platform, but it is written so broadly it could prevent platforms from offering any new services–and even threatens the services restaurants already rely on.
- By not allowing any limits on a restaurant’s ability to dispute platform error charges, SB 1490 also invites fraud and could undermine the straightforward tools restaurants currently use to successfully dispute errors.
The DRA has a history of pushing anti-consumer measures that restaurants opposed
- In 2023, the Digital Restaurant Association tried to pass an ordinance that would require delivery platforms to share some of the most sensitive information about customers, including their contact information and address, with restaurants in Miami-Dade County.
- It drew swift opposition from consumer groups and privacy advocates, who warned that it violated the state’s data privacy principles – and was ultimately voted down.
- The Florida Restaurant and Lodging Association, which represents a large portion of the local food and hospitality industry, also spoke out against the proposal, saying it was not “in the best interests of consumers or restaurants.”
- Former US Representative Ileana Ros-Lehtinen wrote in the Miami Herald that “Thousands of South Floridians have used third-party platforms to safely access meals they need when and how they need it. They enjoy the ability to order a meal they can’t cook themselves when they’re sick, groceries when their child’s soccer game is delayed and there’s not enough time to make that last-minute run to the store or a favorite dessert to surprise loved ones. Customers feel comfortable doing this because they know their data is safeguarded while they support local businesses.”