Italy Fines Foodinho $3M Over Rider Algorithmic Management

Algorithmic Management and Data Protection Concerns for Foodinho in Italy

Glovo-owned Foodinho, an on-demand delivery service, is facing a substantial €2.6 million (~$3M) penalty in Italy. This action stems from an investigation by the country’s data protection authority, revealing a series of operational issues.

Required Operational Changes

The delivery company is now mandated to implement several changes to its Italian operations. The Garante, Italy’s data protection authority, has given Foodinho two months to rectify the most critical violations.

An additional month is allotted for amending the functionality of its algorithms. This is to guarantee adherence to privacy laws, Italy’s labor regulations, and recent legislation designed to protect platform workers.

Rider Rating System and Potential Discrimination

A key concern raised by the data watchdog is the potential for discrimination arising from Foodinho’s rider rating system. At the time of the Garante’s investigation, approximately 19,000 riders were active on the platform within Italy.

Precedent Set by Foodora Litigation

This situation is likely influenced by ongoing legal battles involving riders for another Italian food delivery service, Foodora. A recent Supreme Court ruling affirmed that riders should be recognized as having worker rights, irrespective of their employment status.

This ruling strengthens arguments challenging delivery apps that utilize algorithms for the opaque micromanagement of platform workers.

Violations of EU Privacy Legislation

Italy’s DPA identified numerous breaches of EU privacy legislation in its injunction against Foodinho. These include violations of GDPR principles such as transparency, lawful processing, security, and privacy by design.

Furthermore, the DPA highlighted concerns regarding the potential for discrimination based on how Foodinho’s booking and assignment algorithms function, as well as the use of ratings and reputational mechanisms for labor control.

GDPR and Automated Decision-Making

Article 22 of the EU’s General Data Protection Regulation (GDPR) safeguards individuals against decisions based solely on automated processing, including profiling, when these decisions have legal or significant consequences. Access to paid work clearly falls under this category.

This regulation grants individuals the right to information about specific decisions and the ability to object or request human review.

However, the Garante’s assessment indicates that Foodinho did not provide riders with these rights.

Data Accuracy and Relevance

The watchdog has requested Foodinho to verify the “accuracy and relevance” of the data used by its algorithmic management system. This includes a wide range of signals, such as chats, emails, phone calls, geolocation data (captured every 15 seconds), delivery times, order management details, customer feedback, and device battery levels.

This verification aims to minimize errors and distortions that could limit delivery assignments or even result in platform exclusion. The rating system is also identified as a potential source of these risks.

The company is also required to implement measures preventing improper or discriminatory use of reputational mechanisms based on customer and partner feedback.

Glovo’s Response

Glovo, Foodinho’s parent company, was contacted for comment regarding the injunction. A spokesperson indicated they were preparing a response, and an update will be provided if one is received.

Background on Glovo’s Expansion

Glovo acquired Foodinho in 2016, marking its initial expansion into international markets. The company subsequently pursued growth in the Middle East and Latin America before refocusing on Southern and Eastern Europe.

In 2018, Glovo also acquired the Foodora brand in Italy from German competitor Delivery Hero.

Collaboration with Spanish Data Protection Authority

The Garante collaborated with Spain’s privacy watchdog, the AEDP, which serves as Glovo’s lead data protection supervisor under GDPR, during the investigation into Foodinho and the platform technology provided by Glovo.

The AEDP is also conducting an independent procedure involving Glovo, which it is assisting with.

Previous Sanctions Against Glovo

The Spanish watchdog confirmed the joint effort between the AEDP and the Garante led to the resolution against Foodinho. The AEDP also referenced a 2019 sanction against Glovo for failing to appoint a data protection officer, as required by GDPR.

This resulted in a €25,000 fine for non-compliance.

Focus on Algorithmic Transparency

The AEDP has published guidance on data protection and labor relations, developed in collaboration with Spain’s Ministry of Labor and employer/trade union organizations. This guidance addresses the right of works councils to be informed about the parameters underlying algorithms and AI systems, including profiling that may affect employment conditions.

Spanish Labor Reform

Earlier this year, the Spanish government approved a labor reform to expand protections for platform workers by recognizing platform couriers as employees. The amendments to the Spanish Workers Statute Law will be implemented next month.

The reform also mandates that workers’ representatives be informed of the criteria powering algorithms and AI systems used for management, including those affecting access to employment or performance ratings.

Potential Grace Period for Compliance

It is possible that the Spanish watchdog is allowing platforms like Glovo a period to adjust their systems to comply with the new regulations.

Distinction Between Spanish and Italian Law

Spanish labor law differs from Italian law, leading to ongoing variations in application for delivery apps despite a similar trend toward expanding platform workers’ rights.

Previous Cases of Algorithmic Discrimination

In January, an Italian court found that a reputation-ranking algorithm used by Deliveroo discriminated against riders by failing to differentiate between legitimate reasons for not working (such as illness or exercising the right to strike) and other reasons for reduced productivity.

Deliveroo stated that the judgment related to a historic booking system no longer in use.

Controversial Collective Bargaining Agreement

A tribunal in Bologna recently deemed a Collective Bargaining Agreement signed by AssoDelivery (representing several delivery platforms) and the UGL trade union (with far-right affiliations) unlawful. This agreement seeks to derogate unfavorably from Italian law protecting workers, and the signing trade body is not considered representative enough.

Deliveroo plans to appeal this ruling.

EU-Level Discussions on Platform Workers’ Rights

EU lawmakers initiated a consultation in February to improve working conditions for gig workers, potentially leading to new legislation later this year.

Platform giants are lobbying for deregulation, aiming to reduce employment standards for gig workers across the EU. This strategy seeks to counter momentum for stronger rules at the national level, such as Spain’s labor reform.