Google's former CEO Eric Schmidt infamously said something along the lines of "If you don't want others to know, you shouldn't be doing it in the first place". It showed the hubris of Silicon Valley at the time, and a certain deceitfulness. Because the truth is if they have your data, they can use the data to harm you, even if you haven't done anything wrong!
Finally, we have some evidence of what's been going on behind closed doors for a long time. They use our data to price discriminate. Same product, different prices, based on analyzing our data.
This practice, known as "surveillance pricing", caught notice because an industry body is suing New York State about a new law that requires companies to disclose that they are using algorithms (and data) to set different prices for different people (link). Look, the state is not banning surveillance pricing; they are requiring notification.
The industry doesn't want us to know.
The pushback from industry follows the usual script:
They bring up alternative scenarios of potential benefit to dismiss scenarios of harm. The state alleges that prices are raised on those who can afford them. In this case, they claim that the same algorithms are used to lower prices by offering discounts to selected customers.
I don't doubt that algos target special deals at specific customers. But I fail to understand why customers who love receiving coupons would object to the required disclosure of surveillance pricing - in fact, it would be great marketing to inform these customers that algos found them good deals; they might learn to like algorithms!
Surely, no consumers should object to such disclosure.
The industry apparently wants us to believe that the primary objective of surveillance pricing is to deliver discounts to customers. Anyone who read Chapters 3 to 5 (marketing data) of Numbersense (link) should recognize it as hogwash. Discounts result in lower revenues, unless the business can somehow prevent existing customers from using them. Whatever "leakage" happens, the business has to make up for these "lost" revenues. Thus, the same algos are likely to raise prices on other customers. With the amount of data at their disposal, it's not hard to figure out which customers are less price-sensitive, or have higher "willingness to pay".
I have worked on such algos. What kind of reception do you think data scientists would get from the business teams if we present to them an algorithm that delivers discounts to selected customers, leading to the predicted outcome of lower total expected revenues (and lower profitability)?
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The usual script from the industry bodies also includes the false claim that telling the truth is "misleading". This is the same script used to oppose non-GMO labels. In this instance, they assert that customers will interpret the mandated disclosure as evidence of "price gouging".
These industry honchos aren't alarmed when consumers falsely believe that prices are fixed for everyone - when such disclosure isn't required!
I must digress to complain about another industry practice that is gaining popularity by the day, at least in the U.S. Many stores don't even bother putting up price tags. Some restaurants and coffee shops put up menus without prices. I just walked into a Vietnamese diner this afternoon, hoping to get an iced coffee to combat the oppressive heat in New York - well, the menu of bahn mi and side dishes is reasonably priced but the beverage and dessert sections have no prices! I walked out, disgusted. The iced coffee, based on redacted prices, is probably outrageously expensive, either compared to their past pricing, or compared to their peers. I'm guessing at least $6 (plus tax and the delightful... tip screen).
In their war against disclosures, some businesses won't even put up their prices.
And yet, we should believe that they won't use our data to maximize their profits.
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