This is a form of financial blackmail. Transferring a domain usually requires paying for one year's additional registration to a new registrar and, sometimes, a transfer fee on top of that and, most times, a hosting fee to redirect it. So, to summarize simply, in story form (to make very explicit how much of a scam this is for a business owner):
<GrubHub> We've speculatively registered 50 domains at a cost of $500 to mislead people into using our order form, which at 20% commission* at $25 per order average (that we take out of what we would have paid to you) will pay itself back entirely in 100 orders placed.
<Restaurant> What?! Stop it.
<GrubHub> Hey, no sweat, we're happy to transfer those domains to you. All you need to do is initiate transfers for all of those domains, at the cost of at least $500 out of the revenue that we've been reducing by 20% for every order placed through these sites, and we'll be happy to transfer those domains to you. Also you'll have to find someone to host the redirects for you, and clean up the SEO damage we did. Best of luck with that!
<Restaurant> I don't have $500 because you've been cutting my revenue by 20%!
<GrubHub> Please rate your GrubHub Support experience by filling out a 5 minute survey.
* "Marketing commission": https://ghlearnprod.wpengine.com/wp-content/uploads/2018/08/...
Now, what Grubhub is doing is unethical as fuck--best case. Worst case, it's criminal impersonation or business identity theft.
The scam is that restaurants can’t as easily pay $500/year to prevent GrubHub from squatting on and SEOing typos of their domain, and GrubHub can simply go make up another 50 domains when the owner takes over the first 50, because they only need the 20% “marketing” ripoff from 100 orders to break even again.
That's silly. No one has the ability to do that. GrubHub was responding to a very specific article which made a very specific claim that GrubHub was squatting these domains in order to lock restaurants into their platform. The most relevant response to that claim is to point out that they will transfer the domains if requested. The article in question did not make your "financial blackmail" claim, and there's no reason to expect that GrubHub would have anticipated it.
Because it is reasonable to assume that, if they would do that, their PR defense would include that. Since it does not, but does I close transfer, it is reasonable to conclude that transfer on demand is the most they will do.
I absolutely can't stand the whole 'growth hacking' phenomenon, usually it boils down to doing something at someone else's expense in order to improve ones own position in the market. It's the mafia mentality brought to start-up land, suddenly you find you have a 'partner' that you did not choose who skims off a good portion of your profits.
I gather that initially it just meant "engineering focused on growth", and I can see how you might want it as a counterbalance; if you have teams devoted to beautiful UI and stable infrastructure, but not growing, it might get neglected.
But in practice, it mostly seems like a "dirty tricks" role. Dark signup patterns produce growth, fake competition produces growth, dishonest countdown timers and 'rooms remaining' counters produce growth. Having a role devoted to hustling either your users or your customers isn't a good look.
Pinterest is like ExpertSexChange dark pattern strategy taken to the max.
In every other system the “Mafia” takes the whole thing.
Edit: The text of their response is quite curious. In part it reads: "Additionally, we have registered domains on their behalf, consistent with our restaurant contracts. We no longer provide that service..."
If I were to guess, the fact that they'd be registering these domains was something slipped into the small print of their original contracts. Most restaurant owners probably wouldn't have noticed or understood the implications. The practice could have then been discontinued once it served its purposes of getting (or helping to get) Grubhub up to scale.
Actual site: http://www.mariostogo.com/
Slice scam site: https://www.mariospizzaphiladelphia.com/
Most of these small pizza shops have no idea this is happening and Slice is just ripping off customers. They even claim listings or suggest edits on yelp, foursquare, google, etc. with their Slice domain so customers assume it’s the shop’s actual site. I wish someone from Yelp, Google, etc. would blacklist Slice sites and kill the company and their scammy business practices.
Edit: I forgot to mention they created fake phone numbers for the shops too which is what alerted me to this scam in the first place. I googled the number for Mario’s and called it but a young female answered the phone and I heard call center chatter in the background... normally when calling Mario’s one of the guys with a thick accent answers and speaks in broken English. I’ve never seen a single female employee work there in the 15 years I’ve been ordering from them. On top of it all, the delivery address got screwed up between my call in order that Slice intercepted and Slice then calling the actual Mario’s number to relay my order. Come to think of it, I payed with a credit card over the phone so Slice took my CC info and then relayed that as well... that doesn’t seem kosher.
(I now have the real Mario’s number stored as a contact in my phone.)
This infringes the businesses' trademarks, which exist even if not registered. They can and should be sued.
The article says grubhub uses business names and images for "businesses they either work with or are pitching to get on the platform". In the latter case there's no contract fine print to defend themselves with.
If the restaurants don't want to work with them they can just not. That they do proves that it is a net benefit.
So GrubHub is claiming that it wasn't purchased in "bad faith" because they are helping the business get more orders. Therefore it isn't cybersquatting.
I am not saying I agree (I think all these delivery services are predatory in more ways than one), but there statement is saying that according to ICAAN's definition they are not cybersquatting. Of course this is semantics because the local business would claim that it was bought without permission and was bad faith. And that is what GrubHub's legal team wants. A discussion about the exact definition of cybersquatting that goes on for months and/or years until the small company realizes it isn't worth their time.
This is the value of class action lawsuits. While class actions are often scams in their own right, this would be a legitimate example of a class action serving its purpose. All the thousands of restaurants affected by this would get together to fight against the company. That would be enough to scare GrubHub (and others).
I have a friend in Seattle who became known as a reliable web developer for new restaurants.
He took credit to eat rather than cash to do this relatively simple work for them. As a result, every time I’d visit we’d eat at some nice newer place on his credit line, responsible only for tips. It felt like minor celebrity.
I suppose this is what newer website platforms are for but frankly I think even weebly is somehow too much for many.
The good old tax dodge.
You can dodge more taxes in Seattle driving down to Portland to buy a MacBook.
That's assuming you don't have to hire a lawyer to send a strongly-worded letter to them. Given the thin margins many restaurants operate under, it would be easier for many places to not bother, especially since GrubHub relays the orders, so even if the order goes to the wrong address they still get their money.
This turned out to be a hard sell so most other systems took the other route: they bought a domain and did SEO for thousands of restaurants across the country. SEO and websites is not something the average small business owner is an expert on.
To make it even worse, some of these online ordering systems even convincend Google maps that they were the official site, and a google maps search would also list their fake website as the official website.
Of course to these businesses it just seemed like they were getting a lot of sales from these companies, in reality these people were just typing in the restaurant name into Google. The restaurants usually had to pay 10%-20% to Grubhub, beyondmenu.com, et. al.
The most egregious company that does this is probably beyondmenu.com.
Perhaps the ambulance chasing lawyers should turn their attention to these aggrieved restaurant owners next. They'd have a field day.
Most of the money Apple makes from the App Store are for in app consumables from games. Admittedly there are still a lot of legacy subscriptions from both Netflix and Spotify before they pulled out of going through Apple for subscriptions.
The same goes for Yelp or GrubHub. You can use Yelp for free, but Yelp is generally preying on local businesses to force the businesses to pay Yelp because of Yelp's distribution online.
GrubHub often has free delivery, but they are charging huge commissions to the restaurant you order from.
Someone always pays. It is the way the world works.
Netflix chose to use the App Store as a method for payment even though they didn’t have to. They decided it was worth the trade off. Plenty of subscription services decided it wasn’t from day one.
If google and the internet went away tomorrow, small local businesses would likely be better off. Instead of having to pay money just to keep competitors from bidding on their brand or worrying about all the ways tech startups prey on small local businesses!
Remarkably, this company is still operating and still doing largely the same thing in violation of the consent decree. I found out about it when my mom tried to buy tickets from the Hult Center in Eugene OR, and lost $500 on 'hult.centereugene.com' thinking it was the official venue.
Also, don't look towards the engineers, who may or may not have known. Look towards the money. Who are the VCs invested in them and how many of them knew and encouraged that in the name of growth? And, of course, the executives.
Also there is legality and then there is ethics. Something in the contract might be perfectly legal, and yet unethical.
What service do they no longer provide? Registering domains on their behalf, or microsites, or both? Going forward are they going to have the company register their domain themselves and point it to GrubHub?
There's always the cost that GrubHub, or the restaurants' own solutions, could be cannibalizing each other. It's a similar problem that any company has across marketing channels. GrubHub could be more transparent about their microsites, but there's always the possibility of some restaurant owners just not understanding what they're getting after signing a contract no matter how hard GrubHub tries.
Although, phone orders are definitely tough. Restaurants have historically hated phone orders because of how GrubHub makes money off of them.
Pretty easy to see how incremental thinking leads to a shady result. We get paid $X per order from our restaurant clients, they like more orders so if we can get them more, they’ll be happier and pay us more -> improve SEO of Grubhub<dot>com -> works -> what else can we do -> use our seo skills -> register other websites do seo -> more orders.
Bad result, but know how they got there.
Somebody with technical skills performed the purchasing of these 1,000s of domains and setting up these fake sites. When that person continues on in their career, will they proudly exclaim to prospective employers, how they helped their company perform these tasks to leech off small businesses?
Not really hard core technical skills....
> When that person continues on in their career, will they proudly exclaim to prospective employers, how they helped their company perform these tasks to leech off small businesses?
The tasks might be divided in various ways so that not one guy did it. For example the task of generating the front is delegated to an engineer who does this feature so that restaurant can easily generate a website for themselves if they want. What they leave out is telling that actually GrubHub sales employee registers the domains for GrubHub and generates the webistes with this one-click tool.
It is quite obvious that someone with not so much skills is more willing to do unethical work than someone with higher skills and demand for those skills.
Also fun that they call the websites vanity websites: "utm_medium=whitelabel_vanitywebsite"
Sorry about that
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It's also for SEO, not just commissions.