Uber Agrees To Acquire Postmates For $2.65 Billion
MARY LOUISE KELLY, HOST:
Uber's ride-hailing business has been crushed by the pandemic. So it is leaning into food delivery to help make up the lost revenue. To do that, Uber is spending more than $2 1/2 billion dollars to buy the app Postmates. We should note Uber is an NPR financial supporter. NPR tech correspondent Shannon Bond has more on this deal.
SHANNON BOND, BYLINE: Harry Campbell runs a blog for his fellow Uber and Lyft drivers. It's called The Rideshare Guy. But these days, it might be more accurate to call it the food delivery guy.
HARRY CAMPBELL: All of our top content on the blog and on the YouTube channel is all food deliveries. So everyone is, you know, signing up or trying to understand it and the earnings potential.
BOND: That's because ride-hailing is in trouble. Lots of people aren't going to the office or taking trips, so they're not taking Ubers, but they are ordering takeout from restaurants. Orders for Uber Eats food delivery doubled during the second quarter compared to a year ago. In those same three months, demand for rides plunged 75%. Here's how Uber CEO Dara Khosrowshahi explained the deal to Wall Street analysts.
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DARA KHOSROWSHAHI: Consumers in restaurants have been shifting towards delivery before COVID-19, but the pandemic has accelerated these trends rapidly attracting new customers and restaurants.
BOND: But this deal is not going to save Uber from bleeding cash. Food delivery is really competitive. There are lots of apps to choose from out there, so Uber and its rivals spend a lot of money on discounts to attract customers. The idea behind buying Postmates is to get even bigger so Uber can take on the No. 1 food delivery app, DoorDash. That's good news for customers' wallets, says Dan Ives, an analyst at Wedbush Securities.
DAN IVES: I think it's going to be cheaper food delivery in the near term because you're going to see DoorDash, Uber Eats going after market shares and the main way they're going to get there is on lower costs.
BOND: But Campbell the driver and blogger says more apps meant better options for drivers.
CAMPBELL: So you can kind of compare the various offers. You can see who's offering the best bonuses. And you can kind of hold each company accountable.
BOND: And he says drivers are already feeling squeezed. What many really want is to transport people, not food. That pays more money.
Shannon Bond, NPR News, San Francisco. Transcript provided by NPR, Copyright NPR.