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The advent of Big Data, artificial intelligence, and the ubiquity of our digital footprints has made it easier than ever to uncover consumers\u2019 preferences and price points.<\/p>\n
And the Justice Department\u2019s top antitrust official just delivered a stern warning to companies that may be trying to set prices on an individual basis.<\/p>\n
During an interview with the New York Times<\/a> published on Saturday, Assistant Attorney General Jonathan Kanter was asked about dynamic pricing, or the practice of rapidly changing prices based on market conditions, often for a particular time of day.<\/p>\n \u201cCompanies are getting better at figuring out how to maximize profits,\u201d he replied. \u201cThe more information they have about who you are and what you\u2019re willing to pay, the more they can charge you. I think the ability to do that on a personalized level leads to greater extraction of monopoly power than probably ever seen in history.\u201d<\/p>\n That comes after fast-food chain Wendy\u2019s said earlier this year it would test dynamic pricing, enabled by new digital menu boards. Following widespread public backlash, the company clarified that it\u2019s different from \u201csurge pricing.\u201d<\/a> Wendy\u2019s added that digital menus could allow the company to offer discounts to during slower times of day<\/p>\n Meanwhile, Walmart is replacing its sticker price labels with digital screens <\/a>by 2026, saying that the switch will mean a \u201cprice change that used to take an associate two days to update now takes only minutes.\u201d<\/p>\n But the world\u2019s largest retailer also insisted that it\u2019s not introducing dynamic pricing, saying that it would go against one of the company\u2019s core commitment to offering an \u201ceveryday low price.\u201d<\/p>\n \u201cIt is absolutely not going to be \u2018One hour it is this price and the next hour it is not,\u2019\u201d Greg Cathey, senior vice president of transformation and innovation at Walmart<\/a>, told Reuters<\/em><\/a> during the company\u2019s annual shareholder meeting in Bentonville, Ark., earlier this month.<\/p>\n Meanwhile, Kanter also told the New York Times<\/em> that the use of AI in determining prices is a concern as well. When asked if he views AI tools communicating about prices in the same way as human colluding on prices, he replied that \u201cIf your AI fixes prices, you\u2019re just as responsible.\u201d<\/p>\n \u201cIf anything, the use of AI or algorithmic-based technologies should concern us more because it\u2019s much easier to price-fix when you\u2019re outsourcing it to an algorithm versus when you\u2019re sharing manila envelopes in a smoke-filled room,\u201d he added.<\/p>\n<\/div>\n<\/div>\n