DoorDash, Amazon and Corporate Oversight Through Public Shaming

(Bloomberg) -- Last week, the furor over how delivery apps such as DoorDash Inc. pay their workers boiled over. Heat on the company, which is valued at more than $12 billion, had escalated over the past year, and public outrage finally secured an apparent victory. It turns out that public shaming can be an effective form of corporate oversight.

DoorDash’s policy, which uses customers’ tips to offset the amount the company pays its delivery workers, has been in place since 2017. The company said in February that it was sticking by the divisive pay system, even after Instacart Inc. backed down. DoorDash was probably hoping time would cool the controversy. But then a New York Times reporter wrote a first-person account of his stint as a delivery worker, and after several days of criticism toward the policy, DoorDash Chief Executive Officer Tony Xu changed course. He tweeted that the company would start paying workers separate from their tips.

Meanwhile, customers incensed that their tips had subsidized the company’s expenses rather than the workers’ have been exploring a different solution: tipping in good, clean cash, my colleague Eric Newcomer writes. Paper money is a foolproof option, but it has a major failing: It requires effort. Anyone who has designed an app knows that if an action requires more work—like opting out of a routine invasion of our digital privacy instead of going with whatever is set by default—fewer people will do it.

Thanks to the super-powered luminous rectangles we carry all day, it’s extremely easy to get things delivered to you by swiping a screen: late-night snacks, a grocery load of bananas and sliced bread or a quick lunch salad. That same screen shows you where your meal is, predicts when it’ll arrive or blips when it’s ready for pickup. Where are you most likely to go when you want to give your delivery worker a well-deserved tip? The answer is glowing in your hand.

That’s why people who want fairer compensation for workers in the ever-growing gig economy have to focus on convincing companies to build it into their apps, not advocate for a return to a bygone era of money made from trees. Customers with good intentions but hectic lives are going to tip in the easiest way possible, and that’s still a problem for the many people who deliver goods for Amazon.com Inc. Even after DoorDash bent to public demands, Amazon still uses a similar pay system for two-hour deliveries from Whole Foods or its warehouses through the Prime Now app.

With little regulatory oversight, companies wield tremendous power in how they design their apps. This can come in the form of a blaring sonar alarm to pressure workers into taking an undesirable job, as Instacart does, or an email stalking mechanism that’s turned on by default, as was the case with a controversial $30-a-month email service. The app, Superhuman, would track emails to show not only if recipients had opened them but how many times, when and at what approximate location. The company eventually made some changes in response to a public uproar.

As for fairly compensating drivers, some companies are trying to distinguish themselves by searching for a better way. A year ago, when a DoorDash driver sued the company over tipping and labor classification issues, a San Francisco Bay Area grocery delivery business called Good Eggs implemented a new alternative to tipping. It began charging every order a $4.99 “Good Jobs fee” to support workers, said Bentley Hall, the CEO: “We think that’s a better way to achieve that goal.”

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To contact the editor responsible for this story: Mark Milian at mmilian@bloomberg.net

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