The merger was not the first federal document that week with both companies’ names on it. On Wednesday, October 28 — one day before DoorDash and Instacart announced the $17 billion acquisition — the Federal Trade Commission (FTC) ordered both companies to hand over detailed information about whether they use personal data to set the prices each customer sees and the pay each driver earns, according to the agency’s announcement covered by PYMNTS.
The orders went to nine companies: DoorDash and Instacart alongside Uber, Lyft, Delta, United, JetBlue, Target and Walmart. They were issued under Section 6(b) of the FTC Act, approved by a 2-0 commission vote, and they are compulsory — each company has 45 days from receipt to respond, and the FTC can go to federal court to force compliance.
The demands reach back to January 1, 2023, and they are specific: document the inputs, tools and procedures used to set prices and pay, including whether a driver’s compensation varies with their phone usage or their history of accepting or declining offers. “We intend to scrutinize the opaque methodology that some companies in these industries may be using to determine how much consumers pay or how much gig workers are paid for the same product or service,” FTC Chairman Andrew Ferguson said in the announcement. “Consumers deserve to know whether companies use their web surfing habits or other personal data to estimate the highest price they can charge each consumer.”
A study that reads like a warning
The agency is careful to say this is a study, not an enforcement action, and that the orders accuse nobody of breaking the law. But the timing does work the press release does not. The same FTC that traditionally reviews grocery and retail mergers, as Reuters reported, is now formally studying the pricing machinery of the two companies asking its permission to combine — and the question at the center of the study is precisely the one merger critics are asking: what happens when the two largest pools of shopper and driver data in American delivery sit inside one company? Groundwork Collaborative president Lindsay Owens put it bluntly to Reuters, saying the deal “would be obviously illegal and consolidate an alarming amount of surveillance and pricing technology in one company.” Emarketer analyst Zak Stambor called regulatory hurdles the deal’s biggest wildcard, noting the overlap between the two companies in grocery delivery makes antitrust scrutiny close to certain.
Neither company starts this review with a clean file. Instacart agreed last December to pay $60 million to settle FTC allegations of deceptive advertising, failed refunds and unlawful subscription enrollments, and it previously ended an in-app price-experiment program after a Consumer Reports and Groundwork Collaborative study found some shoppers were charged more than others for identical items from the same store at the same time, according to Reuters. That history is now part of the backdrop against which federal staff will read both companies’ answers — answers that land in mid-December, while the merger review is still young.
A second front, in Sacramento
The federal fight is not the only one being organized. The UFCW Western States Council, the union representing grocery workers across the West, came out against the deal on announcement day and pointed at a weapon Washington does not control: AB 1776, California’s newest antitrust law, which the union sponsored this year. “When we sponsored AB 1776 this year, we didn’t expect to use it so fast,” council president Mark Ramos said in the statement, predicting the merger “will face significant antitrust scrutiny again” under the California law. Ramos argued the heaviest burden would fall on people who cannot easily shop in person — homebound older adults, people with disabilities, CalFresh households and rural residents in food deserts. It is a different theory of the case from the FTC’s: not data, but dinner — what one gatekeeper between growers, grocers and households does to the price of food itself.
The lawyers arrived within hours
Shareholders, meanwhile, are being courted. Within hours of the announcement, at least three investor law firms — Brodsky & Smith, per Newsfile; Halper Sadeh LLP, per Business Wire; and Ademi LLP, per GlobeNewswire — announced investigations into whether Instacart’s board secured a fair price and ran a fair process. The firms are probing the change-of-control benefits flowing to company insiders and whether the deal’s termination penalties were structured to discourage a rival bidder from topping $65. Investigations of this kind are standard practice after any large buyout, and none has yet become a filed lawsuit. But they mark the shareholder vote — the deal’s first formal gate — as contested ground, and every disclosure fight between now and that vote will pull more of the board’s private deliberations into public filings.
Wall Street priced the risk
By Friday, the Street had rendered its first verdict, and it was a split decision, as Stocktwits summarized from The Fly. Cantor Fitzgerald, Bernstein and Citizens all downgraded Instacart stock, with Cantor and Bernstein pinning their targets at exactly $65 — the deal price, treated as a ceiling — and Citizens offering no target at all, saying it does not expect another bidder to emerge. On the buyer, the knives came out more quietly: Needham cut its DoorDash price target to $235 from $265 while keeping its Buy rating, and Wells Fargo trimmed its target to $200 from $230 with what it described as mixed views on the acquisition. Wedbush broke the other way, upgrading DoorDash to Outperform and raising its target to $230, arguing consolidation is exactly what the grocery fight requires.
The market’s own gauge kept widening: Instacart shares settled near $57, roughly 12 percent below the $65 offer, as Finvestly tracked — a deeper discount than the one recorded on announcement day, and the market’s running price on the probability this deal ever closes.
The numbers the deal arrived with explain both the ambition and the skepticism. DoorDash reported a third quarter that beat estimates — earnings of $1.06 a share, revenue up 34 percent to $4.62 billion, marketplace order volume up 36 percent to $33.9 billion — and told investors it targets at least $500 million in annual synergies from the combination, per Briefing.com. Instacart’s quarter, released the same morning, was murkier: revenue up 17 percent to about $1.1 billion and order volume up 15 percent, but earnings of 60 cents a share missed expectations, gross margin narrowed, and the company suspended its guidance because of the transaction.
What to watch next
Three clocks are now running. The FTC’s 45-day response window closes in mid-December. DoorDash’s Form S-4 — the registration filing that will carry Instacart’s proxy statement and the fullest public account yet of how this deal was negotiated — is still to come, as PPC Land noted in its filing-by-filing breakdown. And the antitrust review itself, in the United States, Canada and Israel, has barely begun. One silence is already scheduled: Instacart’s cancelled November 5 earnings call means the target company’s shareholders will get no public question-and-answer session before the proxy lands. The deal’s defenders spent announcement week arguing this is about helping local stores survive Amazon and Walmart. The documents arriving over the next six weeks — pricing data to the FTC, a proxy to shareholders, filings to three governments — will test that story line by line.
The 247 Take — DoorDash announced a merger on Thursday; on Wednesday, the federal government had already asked both companies how their algorithms price your groceries and pay your driver. Those two facts now travel together. A deal sold as a shield against Amazon and Walmart will be judged on a simpler question the FTC is asking under oath-grade compulsion: whether the machinery being combined was fair to the people on either side of the order in the first place.
