San Francisco: Don't Fall for Industry Defense of Surveillance Pricing
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If it were up to me, I'd probably give people much stronger legal rights to control their personal information, which would in turn decrease "surveillance".
But I haven't seen a convincing argument to ban price discrimination. There seems to be some kind of implicit assumption that price discrimination reduces consumer surplus on average. But I've never seen a convincing argument to that effect.
For example: Pharmaceuticals are often priced much low in poor countries. That's price discrimination. (You could think of it as a primitive form of surveillance pricing.) But if that were banned, pharmaceutical companies wouldn't lower prices for everyone. That would destroy almost all their revenue which comes from high prices in rich countries. Instead, they'd charge rich-country prices to everyone, and most people in poor countries would simply have to go without. That seems like it would be pure harm.
It's entirely possible that some kind of "coarse" price discrimination is OK/good but "fine-grained" price discrimination is bad. But where's the argument?
This seems entirely reasonable - they're obviously a point where tax rates are too low and revenue isn't being brought in, but also a point where tax rates are too high, incentivizing tax shelters or outright crime, and revenue starts decreasing again. The price discrimination side is the same thing just on "optional" purchases instead of taxes so it makes sense there is some Laffer curve corollary.
Well you simply make it illegal to charge more than the poor country prices and, bare with me here, you also make it illegal to go bankrupt.
Pharmaceuticals lobbying hard to get the UK to stop buying drugs on the national level (where they have enormous pricing power) and make hospitals responsible for buying drugs. This would be terrible for the UK.
You really see this in spades with Uber/Lyft though. I've often compared Uber prices with friends of mine and there can be a big difference for the same trip at the same time with two different people.
This phenomenon unfortunately makes me much less bullish on the AV future, because robotaxi providers will try to do this to extract the maximum cash out of users. Someone who decides to sell their car and just take automated rides is going to get gouged because the algorithm is going to figure out that they have no alternative.
One thing I've found with a lot of adversarial algorithms is that you have to demonstrate to the algorithm that you have an alternative. For example, if you consistently check prices on the Uber and Lyft apps and pick the lowest cost one, they will notice when you price out rides and then don't take them, and you will get better prices.
Similarly, with feeds, I have been finding that Facebook and YouTube want to push me short video content, even though I don't like it and don't watch it. You can push the button that says "Show Less" or "Not Interested", but they generally don't care. What works is when they show you something you don't like is to close the app and do something else. That is a signal that they respect.
I just added a rule to uBP to delete the element from the DOM.
This even happens with your own Uber accounts- when I'm logged into my work Uber account the prices are always $5-$25 more expensive but if I toggle to my personal Uber account they drop immediately for the same ride. I asked our work accounting team (with screenshots!) if I could just use the cheaper ride via my personal account and expense it to save the company money and they said no lol.
If we want to subsidize poor people, we should probably just transfer money to them instead of trusting for-profit companies to charge them less.
It's how it works now, and we don't much have the ability to change that. If we tried, the pharmaceutical companies would be in danger... those countries can spin up factories to make the same drugs and just ignore the patents. A behavior/strategy they want to avoid encouraging.
The very definition of "price discrimination" is the convincing argument.
"How much does this candy bar cost?"
"Well, you social credit profile says you payed $700 for pair of shoes last week so... twelve grand."
"But the guy in front of me just paid 35 cents for the same candy bar."
"Well, I mean, *he* is white."
> But where's the argument?
Looking to big pharma for guidance is depressingly hilarious.
>...
Your inflammatory wording is doing a lot of the heavy lifting here. Remove that and it seems far more acceptable
"How much does this candy bar cost?"
"$3"
"But the guy in front of me just paid $1 for the same candy bar."
"He's rewards club member so he pays the members' price of $2, then used a $1 off coupon on top"Coupons are not the same as surveillance pricing, because coupons only adjust the price down. They're the way manufacturers get people to try products they wouldn't have bought otherwise. Very importantly, coupons are used by very few people, most still pay the retail price, which forces that price to still remain competitive. Also, anyone can choose to use or not to use coupons. Surveillance pricing is a mandatory price cut or hike that's assigned to you personally by seeing how desperately you want an item and how much you can afford to pay. It's just abusing your customers for the last scraps of cash they have left in exchange for the same product.
Member-only prices are closer to surveillance prices because they make you trade away your purchasing and location data, or even enter some kind of a financial contract with the company, in exchange for a lower price. But it's still nowhere as evil because most people still pay the normal retail price, so the difference between the two prices can't be too disconnected from reality, and because the hoops they make you jump through are still technically free, so it's not dependent on your ability to pay.
There are two ways to legally "earn" money. The first is to provide a product or service that is sufficiently valuable the buyer willingly parts with the money for the price.
The other is extractive — to find a way to exploit the customer with limited choices and extract the maximum value from them. Monopoly pricing is the primary example — people need electricity, housing, food, etc. and if someone corners those markets, or colludes, they can extract a far higher amount of money from people than they would willingly spend in an actually free market of multiple competitors and fully available information (wherein another competitor would offer prices closer to the cost of production and take the business from the overpriced competitor).
Production of value is the essence of the value of capitalism. Extracting value by coercion is fundamentally corrupt, and at the extreme end is nothing more than mob rule ("nice store windows you got there, it'd be a shame if something happened to them; pay us for protection").
Surveillance pricing is simply a fundamentally dishonest form of the latter, exploiting massive amounts of information on customers to extract more money from a person than they would be freely willing to pay for a product, because you found a temporary or permanent vulnerability and 'have them over a barrel'.
A society that permits surveillance pricing will inevitably become more impoverished because the few players doing surveillance pricing will extract more money from the society WITHOUT creating any more value. This impairs everyone else's ability to provide value.
Allowing it is fundamentally stupid and self-destructive.
Why can't it be both? SpaceX created starlink, which I don't think anyone doubts is "a product or service that is sufficiently valuable the buyer willingly parts with the money for the price". Yet at the same time it engages in price discrimination. They have different service tiers with various restrictions placed on them. For instance, the cheapest tier costs $55 but must be stationary. The unlimited aviation tier costs $200k[1] but works on a plane. While I'm sure there's some cost differences between serving the first plan vs the second, it's pretty clear there's some discrimination going on. Does that SpaceX is "extracting more money from the society WITHOUT creating any more value"? Would society be better off if starlink was forced to charge one price?
[1] https://www.corporatejetinvestor.com/news/starlink-price-ris...
It is not a difference for each person; it is a difference for a different category or type of person or service.
It is not exploiting spying on a person's private life and seeing when they are desperate or get the DGAF discount.
The SpaceX stationary/mobile distinction actually provides a better service - for more money, you get to move around. I'm not sure if it puts any higher load on the system but my guess would be the excess profit exceeds the extra cost of tracking a mobile terminal.
They aren't great, but are at least fair. Airlines have also been doing it for decades, beyond economy/biz/first but also cheaper if your flight includes a Saturday stayover (extra $$ for typical biz travelers) and far more sophisticated schemes now.
Similar for parking lots charging more per hour during business hours vs nights/weekends.
The key is the category-type prices are not exploiting an unfair advantage by prying into individual customer's private lives.
Is it on a similar (slippery) slope of charging more without providing more value? Sort of. But they really are very different things.
We already see the results of this in the US in the medical and educational systems, where planning is nearly impossible because the price is hidden until purchase (or even afterward) and the other side is trying to price it at "whatever you have". Unsurprisingly, both of those have absurd debt loads and are causing society-wide discontent/destabilization.
Now imagine that grocers can individually price to you, and you find out what you owe (and whether you need to put some items back) at the register, and this information about you is available to be purchased by anyone so all available grocers have that same knowledge. What are you going to do?
I'm not necessarily opposed to the ideas you're talking about, I just have zero faith that anything positive will be stood up if companies have their say.
Your local water monopoly has perfected price discrimination. Since water is a necessity, the water monopoly sets the price of water to "everything you own".
This says more about monopoly power abuse than problems with "price discrimination". Food is also essential, yet prices don't rise to "everything you own" (even for the poorest) because of competition.
You're right about monopolies -- price discrimination is a symptom of monopolistic pricing powers. It's not that price discrimination should be illegal, it's that successful price discrimination is a strong symbol of monopoly, and the FTC should be cracking down.
Patents and copyright are legal monopolies. Price discrimination is rampant in fields like pharmaceuticals and software which use these. If we can't get rid of the monopoly, at least we should crack down on price discrimination.
I'm not denying this exists, just pointing out your Reductio ad absurdum is absurd and fails rhetorically. If your point is that without surveillance pricing legislation, people selling us essentials will milk us for the last dime we have, that simply isn't happening today.
> It's not that price discrimination should be illegal, it's that successful price discrimination is a strong symbol of monopoly
This isn't obviously true. For instance, airlines engages in intense price discrimination, with different fare classes, discounts, and changing princes per day, yet the industry has famously poor margins - the exact opposite of a monopoly. Same for games and movies (they get heavily discounted after release), and while you can argue the copyright system gives them a monopoly, it's only on that particular work. There are plenty of other games or movies to choose from.
https://en.wikipedia.org/wiki/Bread_price-fixing_in_Canada
They don't even need surveillance pricing, they already try to do it. This wasn't some 1920's scheme, this was very recent.
It seems to me that the level of surveillance we're talking about, with dynamic pricing, would make it both easier for them to gouge and harder for price fixing to detect. Win win for slimy capitalists.
Edit: so maybe you're right that given the opportunity, no one is trying to milk you for literally every dime you have. Still, we should probably not allow businesses to milk the average person for every dime they can get away with, either. That's still bad for society.
(If they try to prevent someone from buying them and using them elsewhere or buying one for a specific other person who requested it who they do not know, then that is different, but it might lead to different issues (e.g. liability of tampering with medications, different regulations in different countries, etc).)
It's in the name. Does having a Mexican person pay more for taco shells than a Caucasian not immediately ring legal bells?
>Pharmaceuticals are often priced much low in poor countries. That's price discrimination. (You could think of it as a primitive form of surveillance pricing.)
That's not surveillance pricing in the same way that utilizing local cookies isn't personal data farming. It's the first step to a much more nebulous web, but no one is saying that businesses can't price based on the area. It's only when amassing millions of user's data that unexpected trends arise that such data becomes dangerous.
If you give an agent a budget of $500 to buy a flight, and the airline knows this and bumps your price to $499 even though it will offer the same flight at $300 to someone else, is there harm done? I argued it feels unjust. He said it's totally fair, it's within budget so what's the problem?
Naturally this trends towards a sort of principal-agent problem where the airline is incentivized to bribe your agent for up to $198 to max out your budget (which is a problem if you're not running your own agent).
But for general personalized pricing, there is the same dynamic to posture that you have a limited budget so that companies offer you better prices (regardless of whether you really do or not). This is haggling culture at scale.
I worry about a world trending towards this sort of thing and away from clearly universal prices and wrote about this at the beginning of the year: https://digitalseams.com/blog/the-behavioral-cost-of-persona...)
If it becomes the norm to charge the maximum that someone is willing to pay in every consumer transaction, then business owners are almost forcing average people to try to end capitalism.
Inverting the argument almost always exposes cracks, because they will immediately switch to why it’s not the same.
At first I was quick to assume that the proponents of these schemes work in adtech, data harvesting and processing companies, or are just extremely rich and poised to become the beneficiaries of all the surveillance. But so many people are bringing up things like regional pricing for poor countries, coupons or other types of discount that it makes me feel like they think this will benefit them. Are we really about to fall for the 'if you just let us track you, you will be rewarded!' scheme all over again? Did we forget when credit scores were promised to provide anything positive to the customers, but instead became exclusively a way to punish the worst offenders? You don't get anything from a good credit score anymore. Or what about letting your car insurance company track your movements under the promise of discounts which quickly turned into the promise of a lack of a punitive rate hike if you drive well?
Giving you a good deal is not profitable. Whatever mind tricks you think you'll be able to play under a surveillance pricing regime will not work. They will always be three steps ahead of you.
Obviously reality is probably somewhere in the middle.
And it makes sense from the lender perspective too - credit scores are ubiquitous now, you don't need to lose money by giving your customers sweet deals and rewards to get them into the credit scheme. Everyone must have a credit score now to exist in society, so why would they spend money on these loss-leaders?
in retail the only risk is stealing or bad behavior inside the store, and there is no way to estimate that risk for an individual person who never had an incident before.
all a store can do is use population models that are effectively open race/sex/ethnic/wealth discrimination, as in "Black customers steal more on average so we charge them more to compensate" or "East Asian women are willing to spend more on cosmetics so we raise the price for them".
if you believe that should be legal then you support the most harmful form of racism that exist today.
Additionally, in situations where it would be reasonable, to publish the catalogs including prices and to allow them to be distributed. (My idea of a computer payment file, additionally requires that the catalog file have a proof of work field.)
I know safeway for instance raises prices on just about everything, and to lower them you need to register for a loyalty program by providing personal information "voluntarily".
we should have the ability to say "I decline loyalty program membership" with the same price. (for example maybe by giving 888-888-8888 as a phone number)
this is basically the same thing as surveillance pricing, but you voluntarily tell them yourself.
In the end, what's the difference?
For me, it's the surveillance infrastructure per se. My main curiosity around these bills is to what extent surveillance pricing–versus ad targeting–drives the economics of those systems. (My prior is not much.)
Sure. I choose whether I participate in that when I use a coupon or sign up for a loyalty programme. Surveillance pricing is more universal.
Surveillance pricing defenders claim that surveillance pricing is better because it works both ways--it might offer a higher price to someone who is desperate, but someone who is likely not that motivated might get a sweet deal. I highly doubt that. A highly-advertised, transparent discount or sale is how you sell to someone who is not that motivated. Surveillance pricing is how you (secretly) extract as much money as possible from the desperate.
And they're subsidized by the revenue made by everyone else. A thousands of coupons start rolling in and meaningfully affecting revenue either the coupons go away or the MSRP increases. It's the exact same pig just slightly different lipstick.
In surveillance pricing, I wouldn't get that choice, I'd just get a custom-to-me price. I'd have no idea how the company decided to charge me more or less than they charged my friend. And no idea how to change the price I'm offered, so it would be terrible if the algorithm decided to charge me +15% for everything.
What's the difference between this and the company charging an absurdly high base price, then your discount is "customized" to you? That's basically how universities work with various scholarship and financial aid schemes working as discounts.
This assumes that the business would raise prices to make more money from people who they think can pay it and give that back to others as a discount.
Do you have evidence this would be the case?
>Do you have evidence this would be the case?
This is pretty standard economics: https://en.wikipedia.org/wiki/Price_discrimination
2. Do you have evidence that the we are operating under standard economics when massive personalized data collection is being used in conjunction with AI to individualize pricing per consumer instead of per market segment?
But personally I think goods should have one singular price for everybody. They can set their out the door price however they want, but anybody else should also be able to buy it at that price at the same time.
the price i end up paying is always some multiple of the real price
You're certainly allowed to have that opinion, but there's no reason to take you seriously if you do.
Most stores and restaurant chains had normal prices, and sale/special prices. You could coupon like mad and save some serious money by going around to a bunch of different places, with them probably losing money on many of those transactions as long as you were disciplined and didn't buy non-couponed items, but it was a ton of work.
(Another model was to have had fake, way-too-high [like, double what they should be] full prices, but 2/3 of those kinds of stores were always "on sale" at what should be the normal price anyway. A disgusting psychological trick and tacit lie that we probably should have found some way to effectively crack down on, but pretty easy to spot and it was no big deal to avoid the places that did this, especially since most of them sold crappy goods anyway. This model's still around, I'm just not really concerned with it here and mentioning it as an aside to acknowledge that it existed, and exists)
Now we have this model:
A very-few stores and restaurant chains still follow the old model, but most now have batshit crazy "normal" prices, require an app (so, spying) and shopping specials to get what should be the normal prices, and then sometimes you do still get an actual bargain.
The net result is that if you just want reasonable fucking baseline prices and not to be gouged, you now have to spend more time and attention than before.
I'm convinced this is a big part of why there's a perception that inflation is even worse than official measurements say it is. I can say it's a major contributing factor to it feeling like our financial situation is worse than it was six years ago, despite making quite a bit more money now. We were finally at a point where we didn't really need to pay attention to sales and such at most normal stores, just didn't matter enough to us to save an extra couple bucks and we could finally relax a little when shopping, like pay attention to which interchangeable thing was cheaper and maybe grab things if we saw a sale but we didn't need to structure our grocery lists around deals. Now? They've price-discriminated via attention and allowing-tracking (those damn apps) so much that we have to pay lots of attention and have their damn advertising prodding us all the time (the apps) again just to not get entirely screwed every time we go to a store. We feel poorer again.
In short, I think a somewhat-obscure online rant-song about Taco Bell contains more insight about how normal people are experiencing the US economy since Covid, than most serious economic reporting does.
Lyrics:
https://genius.com/Jeff-heiny-deserving-taco-bell-rant-lyric...
Song, such as it is (warning: lo-fi screamo, more or less):
https://www.youtube.com/watch?v=rVlT3uHlNAg&t=111s
It's pretty much what I've done when selling at flea markets all of my life. I ask what I think the market will bear, per person and situation. I don't feel at all guilty for it. It doesn't surprise me at all that mass customization in the information age has brought us to it at scale, or that the force of law would be necessary to repress it.
Some people seem to feel they have a right to the best price without negotiating or shopping. I don't feel that I'm owed or owe that privilege.
It should absolutely benefit the blue-collar consumer. Whom it hurts is the moderately rich. (If it works as intended.)
E.g. If a seller knows I've been searching for flu remedies, I've made a social media post related to the illness. Then I go to the pharmacy and everything related to alleviating those symptoms is more expensive for me.
Put simply, if they know you absolutely need something, they will leverage that information.
its the same exploitation in both cases
No. Labour is a famously idiosyncratic market.
The more money you have, the less desperate you are, the longer you can wait to make a purchase, and the more storage space and capital you have to enable you to get the ideal price/unit bulk rate. I don't think surveillance pricing will affect the moderately rich at all. It will only target the poor.
They will know that you have no bread left in the pantry, no car, two children and no other grocery store near you, and you will pay convenience store prices.
edit: Hell, they'll know that you have $10 left, so you can afford it. They'll know you have a history of taking payday loans when desperate, so they'll raise the price even when you can't afford it, and sell your identity to a payday loan company. The payday loan company will pay a bigger premium for you because they know you have a propensity to default.
In lieu of suppressing surveillance pricing, I could live with retailers being forced to open source, in real time, all product and sales related data, including historical as far back as they have.
You "negotiate" by switching to a competitor, or in some circumstances refusing to purchase at all. It's a "negotiation" in the same way that participating in an auction is a negotiation.
Some people seem to feel they have a right to help others get ripped off because they're not schemers. I don't feel I owe you that.