New York City Mayor Zohran Mamdani criticized DoorDash CEO Tony Xu for endorsing a ‘greedy algorithm’ in light of the city’s historic $131 million settlement with DoorDash. The settlement followed allegations that the company withheld tips from delivery drivers.
During a news conference, Mamdani recalled Xu’s remarks from a July podcast where Xu advised business owners to perpetually use a greedy algorithm. In computer science, this type of algorithm focuses on short-term gains without considering long-term consequences. Mamdani argued that this approach harms both the city and the numerous delivery workers who rely on these jobs.
‘Thousands of them deliver for DoorDash, and thousands of them have felt the human cost of the greedy algorithm,’ Mamdani emphasized.
The news conference also saw the announcement of a substantial settlement between DoorDash and New York City. The city’s Department of Consumer and Worker Protection (DCWP) uncovered evidence of systemic underpayment to DoorDash’s delivery drivers. The $131.5 million settlement is the largest of its kind for food delivery workers in the United States.
Of the settlement amount, $115 million is designated for distribution directly to affected delivery workers, with some drivers eligible for up to $5,000 each. The remaining funds will cover fines and aid in developing software allowing workers to record and share data about their earnings with the city.
Mamdani highlighted that this technological development empowers workers to scrutinize and contribute data regarding the payment algorithms governing their schedules and wages. DoorDash will also be required to submit delivery payment data to New York City for three years as part of the agreement.
DoorDash conceded to underpaying workers but claimed the mistakes were not intentional. The company expressed regret over operational failings and pledged to make amends.
‘Simply put, we screwed up. Dashers should be paid in full, on time, every time,’ DoorDash stated in communication with the Associated Press.
Despite DoorDash’s assertion of unintentional errors, Mamdani argued that the company’s practices appeared deliberate. He accused DoorDash of failing to account for every hour worked by delivery workers, particularly during canceled trips or those extending beyond city boundaries.
This settlement with DoorDash is part of a wider effort by Mamdani’s administration to hold food delivery companies accountable. Earlier this year, settlements were also reached with Uber Eats and HungryPanda concerning underpayments and illegal fees, respectively.