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Amazon takes on Uber Eats with investment in UK's Deliveroo

  • Amazon is investing in U.K. food delivery company Deliveroo, expanding the online retailer's international reach into food retailing. 
  • Amazon led a $575 million investment into the London-based company, along with T. Rowe Price and Fidelity. 
  • The move positions Amazon to take on rival Uber's own food delivery service Uber Eats. Deliveroo operates in 14 countries. 

Amazon is investing in British meal delivery company Deliveroo, expanding the online retailer's global reach into food retailing and positioning the company to take on rival Uber Eats.

Deliveroo said Friday that it raised $575 million from a number of investors led by Amazon. The ecommerce giant will become Deliveroo's largest investor, though it did not disclose how much Amazon put in or how large a stake it acquired.

Other investors include T. Rowe Price, Fidelity and Greenoaks. Altogether, Deliveroo has raised $1.53 billion in total funding. Deliveroo was founded in 2013 and has become one of the main so-called "gig economy" companies in Britain, with its brand visible on delivery scooters and bicycles around the country. It has about 60,000 riders delivering food from some 80,000 restaurants across 14 countries.

Like other companies in the gig economy, such as ride hailing firm Uber, Deliveroo has stumbled into legal tussles over whether its riders should count as employees and get work benefits, or as contractors. 

Amazon may have a problem keeping up with its own growth

In May, Britain's High Court ruled that Deliveroo riders do not in fact have the right to collective bargaining, by which they negotiate pay, hours and vacation time as a group of employees rather than individually.

Besides Britain, Deliveroo also operates in several countries in Europe and Asia, including Germany, France, Italy and Australia.

Deliveroo said the new investments will help it expand its operations in its London headquarters as well as fund new initiatives, such as delivery-only kitchens. 

"It will help to create jobs in all of the countries in which we operate," said Will Shu, the founder and CEO of Deliveroo.

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