NYC Mayor Mamdani Targets $600,000 Dysfunctional AI Chatbot Amid Budget Crisis

New York City’s newly appointed Mayor Mamdani has set his sights on eliminating a costly and problematic AI chatbot implemented by the previous administration, citing it as an example of wasteful spending amid the city’s $12 billion budget deficit.

The Costly Failure of NYC’s AI Chatbot

During a recent press conference addressing New York City’s budget challenges, Mayor Mamdani specifically criticized the city’s large language model chatbot as “functionally unusable” while costing taxpayers approximately half a million dollars. The AI system, part of the MyCity government platform launched in late 2023, actually cost upwards of $600,000 to develop and was powered by Microsoft’s Azure AI technology.

The chatbot was originally intended to help small business owners navigate complex local regulations using information from the NYC Department of Small Business Services. However, an investigation by The Markup revealed the system frequently provided dangerously inaccurate and sometimes illegal advice.

Dangerous Misinformation

The investigation uncovered several alarming examples of the chatbot’s failures:

• When asked if business owners could take a cut of workers’ tips, the chatbot incorrectly stated this was permissible, directly contradicting labor laws.
• The system advised businesses they could operate cashlessly, despite a 2020 city law explicitly banning cashless stores.
• Similar misinformation was provided across various regulatory areas including funeral home pricing, worker protections, and housing policy.

While the chatbot could sometimes accurately recite city laws, its interpretation and application of those laws were often completely wrong, creating potential legal liabilities for businesses following its guidance.

Budget Implications

Mayor Mamdani highlighted the chatbot as emblematic of broader financial mismanagement under former mayor Eric Adams’ administration. While acknowledging that eliminating the chatbot alone won’t solve the city’s massive budget shortfall, Mamdani presented it as an example of how “money has been spent while refusing to account for the actual costs of what these programs are.”

This move against the AI chatbot comes as part of Mamdani’s broader efforts to address financial issues in the city, including recently forcing delivery apps to pay back $4.6 million allegedly cheated from drivers.