DoorDash and Instacart want to join forces. Will the U.S. government get in their way?

By Emily Bary and Bill Peters

The companies say their proposed merger will help smaller grocers compete - but analysts wonder if regulators will conduct an 'extended review' of antitrust risks

DoorDash officially proposed a merger with Instacart valued at $17 billion.

DoorDash's official announcement on Thursday that it plans to acquire Instacart wasn't a real shock to Wall Street, as recent reports indicated that the deal was drawing near.

But the big surprise was that the company expects the $17 billion transaction to close at the end of 2027 or in the first half of 2028. To Rosenblatt Securities analyst Scott Devitt, this suggests a "long regulatory path" as the two companies seek approval for their combination.

DoorDash (DASH) is best known for its restaurant-delivery platform, though the company also offers delivery of groceries and retail items. Instacart (CART) is largely focused on groceries.

"Together, we can accelerate innovation across the grocery industry and make online grocery more seamless and affordable for the millions of households we serve," Instacart CEO Chris Rogers said in Thursday's press release.

The companies positioned the deal as something that could help smaller grocers compete.

"The biggest online retailers and grocers are racing ahead, building their own delivery fleets, warehouses, membership programs and AI shopping assistants," the companies said in their release. "A grocer or retailer running on thin margins cannot build all of that alone, and with AI, the playing field risks being tilted even further away from local commerce."

A DoorDash spokesperson flagged a joint website named "Shop Local Together," on which the companies said that the deal could help families save money and local businesses counteract the "AI and robotics" initiatives under way at major companies.

See also: A possible DoorDash-Instacart deal is all about keeping up with Walmart and Amazon, analysts say

But "given the direct overlap in grocery delivery" that DoorDash and Instacart have, Rosenblatt's Devitt said the government could conduct an "extended review" of the deal's implications. When companies with similar businesses look to combine, regulators seek to assess whether the proposed merger could stifle competition in the market.

Representatives for Instacart declined to comment.

Devitt noted that the expected timeline for deal completion offered by the two companies translates to about 12 to 20 months from now. That's "potentially longer than the timeline for Uber (UBER) to close on Delivery Hero, which was announced in July" and could close in the second half of next year.

Before the official deal announcement, the Wall Street Journal had reported on advanced talks between the companies. After that report, Bernstein's Nikhil Devnani wondered whether the transaction would land in regulatory crosshairs.

"Grocery can be a sensitive category for consolidation," he wrote.

The antitrust question "will come down to market definition," Devnani noted. The two companies have perhaps a 3.5% share of the overall grocery market, which Devnani said is "not a problem." But they have a much larger share - an estimated 23% - of the grocery market online, according to Devnani, and an even greater share - perhaps 34% - of the pure-play online grocery market. And when it comes to third-party online marketplaces specifically, that share goes up to an estimated 88%, he wrote.

Yet Wedbush analysts, in a note this week, said the deal was unlikely to encounter much regulatory resistance, given the size of grocery and delivery giants Walmart (WMT) and Amazon.com (AMZN) - the two main companies that DoorDash and Instacart are trying to compete with. Delivery apps, more broadly, have consolidated over the past decade.

Still, restaurants have complained about the fees they have to pay - sometimes as much as 40% of a sale - for orders made through some of those platforms. The deal, for some industry observers, also raises questions about consumer data and the ways companies are harnessing it through artificial intelligence.

Lindsay Owens, CEO of the think tank Groundwork Collaborative, accused both DoorDash and Instacart of overcharging and aggressively tracking consumers. She also said the goal of the merger was to combine the AI tools of both companies.

"Two of the biggest rip-off machines in America should not be allowed to become one," Owens said in a statement. "The FTC must block this merger."

Separately, the Federal Trade Commission on Wednesday ordered DoorDash, Instacart, Uber and several other companies to turn over information that would help the agency analyze the use of personal data to set prices for consumers and pay for workers.

"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," FTC Chairman Andrew Ferguson said.

-Emily Bary -Bill Peters

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10-29-26 1549ET