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Online Shopping and our Rage Against the Machine
-- By CharlotteSkerten - 20 Jan 2018 | |
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< | 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. | >
> | 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 was ready to book. But when she returned 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. | | | | |
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< | 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. | >
> | Airlines and other online retailers often deny using browser histories and other data to determine what individual customers are willing to pay. But experience suggests that personalized pricing is being used in ways which violate our privacy and freedom and reinforce existing biases. | | | Pricing and the internet | |
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< | 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. | >
> | 150 years ago the practice of constant haggling in the marketplace was replaced by most western sellers charging one fixed price to consumers. However, with the proliferation of the internet in the 1990s, consumers began to use stores as showrooms where they could view goods that they intended to buy online more cheaply. In turn, sellers began employing tactics such as behavioral and dynamic pricing, as well as using web histories to determine what consumers will be prepared to pay. | | | | |
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< | 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. | >
> | Price discrimination utilizing demographic information does not only occur on the internet. But today most individuals hand over a staggering amount of data online about their lives, preferences and spending habits. Accordingly, it is becoming increasingly possible for sellers and other platforms to use all of this information to establish a personal demand curve for each person. | | | The Problem | |
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< | 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. | >
> | Price discrimination is the ultimate manifestation of the neoliberal free market economy, at least on the sellers’ side. Theoretically, it could be used to reduce inequality by taking from the rich and subsidize the poor. Unfortunately, however, it appears that many businesses are employing it in an unfair an unethical manner in the unregulated western internet age, exploiting all of the information they have (or can buy) about consumers in order to extract every last dollar for the benefit of their profit margins and to the detriment of society. | | | | |
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< | 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. | >
> | 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, when combined with others’ data, can be used to stop us making our life decisions freely. | | | | |
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< | 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. | >
> | It is also theoretically possible that algorithms could also be used to judge everyone by the same rules, thereby eliminating discrimination. But the algorithmic models being used today are largely undisclosed, unregulated, and have no appeals system. By simply automating the status quo, these algorithms simply serve to reinforce the biases that already exist in society. | | | Our Response | |
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< | 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. | >
> | This is a critical situation which requires an urgent multi-faceted response by individuals, the government and our society as a whole. | | | | |
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< | 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. | >
> | At the individual level, it is unclear whether the average person does not know that handing Facebook and Google all of their most personal information means it will be tracked, sold and used to generate 'big data' which can be used against them, whether they simply do not care, or both. Despite the fact that many people today only read news online that has been paid for by businesses and selected by algorithms, it is possible to increase the number of people who are cognizant of this issue and its implications through first person conversations. | | | | |
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< | Conclusion | >
> | People, from kindergarten through to the elderly, deserve to be better educated about the data ecology in which we now live. Education can make us aware of, and empower us to restrict, our “sharing” online. The layperson should be made aware of cheap solutions (like FreedomBox and Raspberry Pi) that would allow them to retain control over their private information and reclaim their freedom of choice. | | | | |
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< | 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. | >
> | Upon learning the extent to which their online activity is monitored and the ends for which personal data is used, individuals should be motivated to take more care of personal information and demand accountability from those they do share it with. If Facebook and Google cannot be trusted with data, we must switch to more secure options to communicate and share things about ourselves. In this way, online operators that are more responsible and transparent will be rewarded with more users.
Government action is also necessary. This will be challenging given the government’s participation in information gathering about citizens and the power that Silicon Valley wields today. But a democratic government ultimately represents the people, so if enough of us demand change in order to reclaim our fundamental rights and reset the power balance between individuals and platform companies then sufficient political will can be built. In order to protect privacy and freedom, the government must step in to stop unnecessary data collection, and restrict the use, sale and analysis of any necessary data collected. It should also impose laws that require search engines and algorithms to be more transparent and responsible. | | | | |
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< | "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. | >
> | I am cautiously optimistic that these changes can occur in time to preserve a free market. It is unreasonable to expect that every person will choose to reject convenient platforms and apps, but a significant number may do so. The recent Facebook privacy scandal appears to be serving as a wake-up call to consumers, Silicon Valley and the government about data collection, uses and implications. This could be the start of real change. | | | | |
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> | 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. | | |
You are entitled to restrict access to your paper if you want to. But we all derive immense benefit from reading one another's work, and I hope you won't feel the need unless the subject matter is personal and its disclosure would be harmful or undesirable. |
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