Politics Opinion

AI surge pricing, coming to a supermarket and entertainment venue near you

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('Surveillance pricing', edited, image by Cory Doctorow | Flickr)

What hope has the Government of cracking down on surge pricing, now that AI can collect our data even as we loiter in the supermarket? Rosemary Sorensen reports.

WHEN ASKED by the ABC Four Corners program about the way surge pricing was jacking up live entertainment ticket prices, Federal Arts Minister Tony Burke appeared unfazed — ah well, can’t be helped.

Mr Burke told Four Corners:

“Surge pricing is something that, as consumers, people have always dealt with. I don’t love it, but I think we have to be realistic, it’s always been there.”

Four Corners focused on the way ticketing agencies not only increase prices for events according to surges in demand but also embed extra costs without transparency for the buyer. While the artist can choose whether or not their event uses this “dynamic” pricing (which results in more income for both the ticketing agency and the artist), the hidden extras only benefit the agency.

It was ever thus? In fact, as a report in the American Financial Times notes, the marketplace bartering system that responds to supply and demand – which might be what the Minister is referring to – was “dealt with” in the latter half of the 19th Century by the Quakers who introduced price tags when they established the first American department stores.

Thus began an era during which you could expect to be quoted a price for stuff or for work to be done and that price was what you’d pay. Ways to exploit this include what’s called "scalping", where you buy lots of tickets knowing they will be in demand, then on-sell at a higher price.

If it’s difficult to make scalping illegal, you’d have to think banning surge pricing is going to be tricky too. Sweeping up behind the Arts Minister’s “just deal with it” response to the revelations about the use of surge pricing techniques, Assistant Treasurer Stephen Jones said the Government has now made a “firm decision that we’re going to crack down on it”. This sounds both optimistic and unreliable — sort of in the same league as the announcements about banning kids from social media.

Under the notions of fairness and competition, which supposedly restrict dodgy commercial practice, the rules controlling pricing are, according to the ACCC, aimed at policing anti-competitive collusion by companies to fix prices. Beyond that, 'businesses are generally able to set their own prices'; 'supply and demand issues impact prices' and 'prices that people think are too high, known as price gouging, or a sudden increase in price are not illegal'.

So it appears Australian ministers were not overly fussed by the way all this is developing, getting all headmaster-ish and making “firm decisions” to crack down without any proof that they even knew there was a problem. Meanwhile, the United States is already dealing with the next phase of dynamic pricing.

To stay with the Assistant Treasurer of Australia for a moment, Mr Jones told the ABC that they’ll “be looking at the entire economy” in relation to dynamic pricing, “which is affecting everything from getting a ticket to a sporting event to pop concerts”.

Hopefully, it’s not going to come as news to Mr Jones that in the USA it’s gone way beyond pop concerts: it’s being used for everyday grocery items.

Six years ago, the big supermarket chain Kroger began replacing the little price tags you see on the shelf with digital displays — which can be changed quickly and constantly. We have learnt through the Senate Inquiry into Supermarket Prices that shelf-placed price tags have been used to suggest savings where in fact the new price is a reduction in an elevated price. With electronic price tags, imagine how super-efficient this can become for the supermarket – your tin of beans, which used to be $3, is changed to $4, then “reduced” to $3.50 electronically – with no printing or handling of the ticket required.

But wait — it gets even more “efficient”.

According to American Democrat Congresswoman Rashida Tlaib, Kroger intends to use facial recognition and behavioural tracking technology to make it possible to change the price not just in response to a surge in demand but also according to the people who are buying the product. You take a look at the beans, a camera which is part of the electronic digital display captures your image and, supposedly via AI, creates advertising (and pricing) to best talk you into buying those beans.

Congresswoman Tlaib reckons that is a form of discriminatory profiling (and, one might add, creepy).

Kroger was incensed by the slur on its integrity:

'Kroger does not, and has never, engaged in "surge pricing". Any test of electronic shelf tags is designed to lower prices for more customers where it matters most. To suggest otherwise is not true.'

If it feels like the pricing of both goods and services is surging just because it can, what brave new world is ahead where the surge is manipulated according to data – to the algorithm – that’s constantly collected even as you loiter before the cans of beans.

It’s already happening, of course, as anyone who has reached a certain age and finds their computer or phone screen regularly flashing up advertisements for incontinence pads, knows. It’s annoying, but nothing more — until the identity walls of age, gender, race, education, affiliations and interests box you into a more and more confined space.

There could be an upside: you’ve been identified as a bean addict who will have to buy those beans no matter how high the cost. Standing in front of the little digital display telling you you’re buying a bargain bean when you think, yes, but last week it was half that price, you suddenly decide you don’t actually need those beans at all. As you walk on from the incentivised beans, little lights flash on the digital display, so, like a Canberra politician, you turn back briefly to make a rude digital gesture of disdain.

It's all captured on the digital camera on the digital display and back it goes, to feed the algorithm.

Good luck to the Government as they plan to crack down on all this (even if it appears that Mr Burke is urging us to be “realistic” as the algorithm defines us more and more narrowly). However, his “it’s always been there” fatalism is a bit of a worry.

Botulism, racism and ignorance have, too, always been there, pretty much, but we do – and should – keep trying to eradicate them all, no?

Rosemary Sorensen is an IA columnist, journalist and founder of the Bendigo Writers Festival. You can follow Rosemary on Twitter/X @sorensen_rose.

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