Marit Stiles, leader of the Ontario NDP, released a slick video last week on the practice known as surveillance pricing.
She explains a study that found that a retailer was charging slightly different amounts for simple grocery items like eggs and crackers to different customers.
“An algorithm decided who pays more,” she says. Then: “It’s watching everything you do!”
Ominous stuff.
Stiles gives the one-sentence explanation for surveillance pricing: “Corporations using your data to calculate the maximum amount they think you’ll pay.”
The opposition leader, as you have probably guessed by now, is against surveillance pricing, giving it the even more vivid name “predatory pricing.”
She’s not alone in this regard. Wab Kinew’s NDP government in Manitoba has moved to outlaw it, and Avi Lewis called for a ban as one of his first orders of business since winning the federal NDP leadership. In Ontario, John Fraser, the interim leader of the Liberals, introduced a private member’s bill to ban the practice.
But, funny thing: There’s precious little evidence of it happening anywhere in Ontario, or elsewhere in the country. At this point, it feels a little like banning flying cars.
Surveillance, or algorithmic pricing, is not the same thing as dynamic pricing, where companies charge different amounts based on demand, as is common in the hotel, airline and concert industries. Annoying, but legal.
The key difference is the collection of personal data, based on website visits, purchase history, Google searches and the like, which is then used to effectively determine how much a customer wants a particular thing. If they seem like a particularly motivated buyer, the price is shifted upward, usually by a small amount, to be less noticeable.
A fellow who always buys a tin of coffee on the first of every month might get that price bumped up a touch on Coffee Day once the algorithm has detected the pattern. Someone who frequently makes high-end fashion purchases might be offered a higher price than someone who lands on the page for a designer purse for the first time. More nefariously, a parent who is searching the internet for common flu symptoms might then have the price of children’s Tylenol nudged higher for a subsequent purchase.
You can see why critics like Avi Lewis call the concept “creepy.”
Instacart, the U.S.-based online retailer, was found to be using AI-driven algorithmic pricing in an investigation last year — this is the study that Stiles references in her video — but announced in December that it would stop the practice.
Other than that, it mostly sounds theoretical. Lewis wants to ban such pricing “online and in-store,” and Stiles raises the prospect of grocery stores using electronic shelf labels to adjust prices in real time, but how would that even work? We may leave extensive digital trails on our phones and computers, but there is no way for the can of tomatoes sitting on a grocery shelf to know any of that.
I asked the Consumer Protection Bureau if they had any documented examples of surveillance pricing being used in Ontario, or if they had received complaints about it, and was given a three-sentence response that did not answer the questions and said businesses are prohibited from “engaging in unfair practices.”
Asked the same questions, the federal Consumer Affairs department said it would get back to me, hopefully, in 48 hours, which does not suggest a top-of-mind crisis.
John Fraser, the Liberal MPP, said his bill was about “getting ahead of the curve.”
“It could be happening here, and we don’t know about it,” he said.
So, it is fair to say we are not awash in these tactics, at least not yet.
But when Premier Doug Ford was asked about banning surveillance pricing last week, he didn’t say that he hadn’t seen much evidence of it or that he was concerned about its possible worst-case uses, he simply dismissed it out of hand, saying the free market would bring lower prices. “The other one is socialism,” the premier said. “You go around dictating and overseeing every single price, no.”
Ford has a point on one thing: Any company that became known for using your data to charge you the highest possible price would find itself losing customers in a hurry. “I’ll take the non-algorithmic eggs and butter, please.”
And yet, the politics of this are not on Ford’s side. People are angry about rising grocery prices, and worried about Big Tech in general and AI specifically. “Big Tech using AI to drive up your grocery prices” is a sentence practically engineered to set off alarm bells.
Which, of course, is why so many politicians are running with surveillance pricing as the dragon they want to slay. There’s a great villain, even if at this point the villain is just looming somewhere over the horizon.
For Doug Ford, shrugging his shoulders and saying, “that’s capitalism, baby,” does not sound like it will be a great long-term response.