"We" are, of course, not going to do these things. Even were we to begin tomorrow trying to educate a new generation of consumers, from kindergarten up, to understand the data ecology in which they live, and to restrict the nature of their "sharing" with the platform companies that grotesquely overprice web-based communication services at the level of behavior collection that is changing the "free market" into a biased market designed to eradicate individual consumer surplus through "customized" pricing, we would have to wait twenty years to see the results. In the meantime, "cashlessness" will have completed the move from market signalling based on low and symmetric levels of information between buyers and sellers into a completely biased system.

So we are facing the end of the free market in one direction or another. Either the voluntary solutions you conclude by recommending have to be bolstered by administrative changes that control behavior acquisition and use in private-market price discrimination, or we have to expect that only a tiny fraction of "us" will be able to resist, by "elite" forms of technological and behavioral self-protection.

Projects like my FreedomBox, designed to retrofit the Net with privacy protections at the individual household level, would be of some use if they were widely adopted. By using cheap hardware and free software, we can put some protection in place to reduce the ease with which contemporary behavior-collection occurs. But the behavioral implantation of self-espionage through widespread adoption of "phones" on which people come to depend for all the interactions they have in society and the market, and the disappearance of anonymous cash for "convenient" monitored transaction platforms will soon wipe out the advantages we can gain by this route.

I think the best means of improvement in the essay are to reduce the anecdotal material, so as to make a little more room for analysis, and to devote a little more scrutiny to the level of expectation we can have for solutions based on individual education, awareness, and willpower.

Online Shopping and our Rage Against the Machine

-- By CharlotteSkerten - 20 Jan 2018

Recently, I was on the phone to my sister who is planning to come and visit me in New York. After several visits to the Air New Zealand website, she had selected a flight, and wanted to book it while we were on the phone. But when she went back online to do so, the price immediately went up by several hundred dollars. After she cleared her browser cookies, however, the flight reverted to its original price.

Airlines and other online retailers often deny using browser histories to determine whether customers are particularly interested in something and therefore willing to pay more. But experiences like my sister’s indicate that personalized pricing is being widely employed in order to extract every last dollar from consumers. Charging consumers different prices based on specific data may seem trivial. But this practice violates our privacy, undermines our freedom and reinforces existing biases.

Pricing and the internet

150 years ago the practice of constant haggling in the marketplace was replaced, on the basis of fairness and efficiency, by sellers in much of the western world charging a fixed price to all consumers. But the proliferation of the internet in the 1990s began to undermine this implicit agreement between buyers and sellers. Savvy consumers first began to use bricks and mortar stores as showrooms where they could view goods that they intended to buy online for a cheaper price. Then, the New York Times decided iPad users could afford to pay more for their subscription than Blackberry users. Next, dynamic pricing began to reflect live changes in conditions, such as surged price cabs and more expensive soda on sunny days. Now, how budget conscious your web history shows you to be enables Google to 'steer' you towards differently priced headphones.

Price discrimination through utilizing demographic information to establish a tiered pricing system does not only occur on the internet. But as more and more data exists online about our individual preferences and spending habits, it is becoming increasingly possible to establish a personal demand curve for each person. As a facebook user, my sister has handed approximately 100 data points to that website alone, including her income and expenses. Her job, credit rating, bargain hunting tendencies, annual leave balance, and the fact I been reminding her to book flights for the last six weeks can all be used to calculate how much she will be prepared to pay to travel to New York. As a result, the customized price that my sister will be offered in the future for a flight, as well as the price being offered to other potential passengers on the same plane, is entirely unclear.

The Problem

Price discrimination is a manifestation of the free market and is perfectly acceptable from a libertarian perspective. Theoretically, it could be used to take from the rich and subsidize the poor, thereby reducing some of the inequities in society. Unfortunately, however, it appears that most companies will employ it in an unfair an unethical manner, by exploiting the increasing amounts of data they have about us to benefit their profit margins and to the detriment of consumers and society.

Privacy, or 'the right to be forgotten', is a combination of secrecy, anonymity and autonomy, each of which is undermined by customized price discrimination. The vast majority of our online activity is tracked or logged (in a manner unregulated by the rule of law), is attributable to us, and there is huge value in it when combined with many other's data. This can be used to stop us from making our own life decisions freely. It also results in us becoming a product - retailers search for high-value customers while we search for low-priced retailers.

It is also theoretically possible that data and algorithms could also be used to judge everyone by the same rules, eliminating bias. But the models being used now are largely undisclosed, unregulated, and have no systems of appeal. Both the algorithms themselves and the information being put into them are not accessible to the general public. By simply automating the status quo, algorithms reinforce the discrimination that exists in society today.

Our Response

It is unclear whether the average person does not know that by handing Google and Facebook all of our most personal information means it will be tracked, sold (or handed over to the government) and used to generate 'big data' which is then used to our detriment, or whether they simply do not care. In my sister's case it was apparently a combination of both. Despite the fact that most people now access their news online which has been selected by algorithms and paid for by advertisers, it is feasible to steadily increase the number of people who are cognizant of this issue, and persuade them to care about the broader long-term implications, through first person conversations.

On learning the extent to which our online activity is monitored and the ends to which our personal data is being put, individuals should be motivated to take more care of their information and demand accountability from those we choose to share it with. If Google and Facebook cannot be trusted with our data, we must switch to more secure options to communicate and share information. Online operators that are more responsible and transparent will be rewarded with more users. If enough people buy in, governments will eventually be sufficiently incentivized to regulate the collection of data and use of algorithms.

Conclusion

The transparency of the internet was meant to empower consumers. But big data and machine intelligence have also empowered retailers to treat customers as products, and to set customized prices. This violates values that are central to democracy, including privacy, justice and equality. In response, we must stop unconsciously giving away our personal information, learn more about the models that govern our lives, and demand change.

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