New York City Mayor Zohran Mamdani is warning that DoorDash’s proposed $17 billion acquisition of Instacart could raise consumer prices, calling the deal an example of corporate consolidation.
The criticism puts potential costs to customers at the center of a deal that DoorDash and Instacart are proposing as a way to offer consumers more choices and savings while strengthening their ability to compete with companies such as Walmart and Amazon.
Customers of both delivery platforms, grocery retailers and Instacart’s roughly 600,000 independent shoppers could ultimately be affected if the transaction gains shareholder and regulatory approval.
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DoorDash is offering about $17 billion to acquire Instacart, the grocery delivery and convenience company founded in 2012. Under the companies’ plan, the Instacart brand and app would remain, while its shoppers could continue to fulfill their orders as they do now.
“Corporate consolidation means higher prices, harsher exploitation, and greater economic inequality for New Yorkers,” Mamdani said in an article on X.
The mayor also linked his criticism of the acquisition to DoorDash’s recent $131 million-plus settlement with New York City over delivery worker pay, writing, “Just last month, DoorDash couldn’t seem to find the money to pay its delivery workers — until our administration forced them to return more than $131 million in stolen wages and penalties.”
News week has contacted Mamdani’s office and DoorDash for additional comment.
Could the DoorDash-Instacart deal raise prices?
The central question that Mamdani’s criticisms raise is whether consumers will end up paying more.
Jay Aldebert, Chief Growth Officer at International Services, Inc., said News week that consumers should look beyond the initial benefits of the combination and consider what might happen to pricing as competition declines.
“Customers may get a great introductory offer, but what happens to delivery fees, service fees and grocery prices six months or a year later? That’s the real test,” Aldebert said.
He said eliminating a major competitor could reduce pressure on delivery companies to compete on price, service and value.
Some customers may also benefit from an immediate financial benefit. DoorDash said consumers who currently pay $9.99 per month for separate DashPass and Instacart+ subscriptions would eventually pay just one membership fee instead of two. The companies also said their combination could save customers collectively about $100 million a year in membership fees.
Aldebert said a combined membership could truly save customers already subscribed to both platforms, but cautioned against assuming the company’s savings would automatically reach consumers.
“A single subscription could be beneficial for customers who currently pay for both services,” he said. “But let’s not confuse business cost savings with consumer savings.”
Aldebert added: “The question isn’t whether DoorDash can save money. It’s whether DoorDash will share in those savings.”
Instacart customers would have access to 50,000 additional stores available through the DoorDash platform, according to the companies. The question for consumers is whether these benefits and savings from memberships will persist in the long term, particularly if the acquisition reduces competition between major delivery platforms.
Opposition has already emerged within the American Economic Liberties Project, an organization defending the rights of monopolies. The group is urging regulators to block the transaction, arguing that the combined operation would control nearly 60% of the third-party food delivery market.
“This merger represents the next frontier of data-driven abuse, exploiting enormous power asymmetries to reduce workers’ compensation on the way in and empty consumers’ wallets on the way out,” Lee Hepner, the organization’s senior legal counsel, said in a statement provided as part of the deal.
Aldebert said regulators could look beyond what shoppers pay and examine the merged company’s relationships with workers and retailers.
“Regulators should be looking at consumer prices, competition for delivery workers and the influence this merged company could have on restaurants and grocery stores,” he said.
Why DoorDash and Instacart say the deal could benefit consumers
DoorDash and Instacart make a different argument than Mamdani, saying the combination would give consumers more options while giving grocery retailers technology and delivery infrastructure that could help them compete.
DoorDash co-founder and CEO Tony Xu said the proposed combination would combine Instacart’s grocery delivery experience with DoorDash’s delivery network.
“That’s really the goal of this combination, where DoorDash and Instacart can give every retailer a chance to compete in the modern era,” Xu said on a call with investors.
DoorDash has grown significantly beyond its initial restaurant delivery business. It branched into grocery delivery in 2020 and now offers the full inventory of all 2,700 Kroger stores in the United States through its marketplace. The company also added Costco delivery.
Instacart, meanwhile, faces growing competition. Consumer Edge data cited by the Associated Press shows its share of spending on U.S. delivery platforms rose to 18% from 26% five years ago, while DoorDash grew from 44% to 59%. Uber Eats remained just below 20 percent.
Mamdani ties deal to DoorDash settlement in New York
Mamdani’s criticism also stems from the city’s recent conflict with DoorDash over its delivery workers.
In his message Thursday, the mayor said his administration forced DoorDash to return more than $131 million in wages and penalties to workers. He compared that settlement directly with the amount DoorDash is now willing to spend on Instacart.
“Just last month, DoorDash couldn’t seem to find the money to pay its delivery workers,” Mamdani wrote, before comparing the settlement with the acquisition proposal.
Mamdani then broadened his criticism beyond workers, but also consumers, arguing that the deal reflects the dangers of consolidation.
DoorDash-Instacart deal faces competition questions
The companies say becoming larger could allow them to compete more effectively with much larger companies that have expanded their own delivery operations, including Walmart and Amazon.
Walmart, Amazon and Uber have all expanded their delivery offerings. DoorDash has also moved beyond restaurant dining to groceries and other retail categories.
DoorDash argued that combining its delivery network with Instacart’s grocery technology could help local grocers compete with these larger companies. Xu said large companies have invested aggressively in technology, fast delivery and new fulfillment models, creating an increasingly challenging environment for small retailers.
But criticism focuses on competition within third-party delivery itself. The opposition from the American Economic Liberties Project shows that the acquisition is already the subject of anti-monopoly scrutiny outside the government, although that advocacy group’s assessment should not be treated as a regulatory finding.
The proposed transaction will likely require approval from Instacart shareholders and government regulators. The deal is expected to be finalized by late 2027 or early 2028 if these approvals are obtained.
For consumers, that leaves the fundamental economic question unanswered: Would the promised efficiencies of combining DoorDash and Instacart, including potentially paying for one subscription instead of two, offset the risks critics see in bringing more of the delivery market under one company.
Contact Newsweek editors about this story: Samantha Beech And Gray R.Thomas
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