 "FHRAI accuses Zomato, Swiggy of data misuse, seeks commerce ministry action")
The Federation of Hotel & Restaurant Associations of India (FHRAI) -- which claims to represent over 60,000 hotels and 5,00,000 restaurants -- on Wednesday shot off a letter to Union commerce ministry seeking an urgent meeting over what the hotel body claimed “data misuse and private labelling” by food aggregators Zomato and Swiggy.
The letter raises objections to Zomato and Swiggy’s foray into quick food delivery business through private-label apps Bistro and Snacc.
On his part, Blinkit co-founder Albinder Dhindsa has recently clarified on social media that Bistro operates as a standalone team and app, with no Zomato restaurant data used in its development.
But hotel bodies are arguing that their instant food delivery services are subsidiaries of the same companies.
“We believe these developments constitute a significant violation of e-commerce regulations, principles of marketplace neutrality and fair competition, and also pose serious consequences to the restaurant industry," the letter written by FHRAI, which has been seen by Business Standard, says.
FHRAI alleged violation of marketplace neutrality, misuse of proprietary restaurant data, copyright and intellectual property violations, consumer masking, and breach of assurances as some of its key concerns.
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To highlighted how food aggregators are exploiting customers’ data, FHRAI wrote, “Zomato and Swiggy have access to detailed consumer and restaurant data, such as demand patterns, popular cuisines, and pricing strategies. By leveraging this data to create and promote their private-label brands, they are exploiting a clear conflict of interest.”
Restaurants lose their competitive advantage as food aggregator platforms replicate their offerings while undercutting prices, it added.
Attempts to connect with Zomato and Swiggy for comments were not successful. Zomato is in a silent period due to results and Swiggy could not be reached.
Citing the concerns of hospitality sectors, FHRAI requested urgent intervention of the commerce ministry to ensure regulatory oversight, bring in transparent practices, and introduce regulations related to data usage while also focusing on customer awareness.
The hotel body demanded that food aggregator platforms should be prohibited from competing with their restaurant partners by introducing private labels and should make full disclosure of private-label products and specify how they differentiate from the offerings of restaurant partners. The platforms must also be prevented from misusing proprietary data of restaurant partners for their competitive advantage, the letter added.
The National Restaurants Association of India is also exploring legal routes and is likely to approach the Competition Commission of India to raise issues such as consumer data masking, private labelling, and abuse of dominant position, among others.