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 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.

Airlines and other online retailers often deny using browser histories and other personal data to determine what individual customers are willing to pay. But experience suggests that personalized pricing is being used in ways that violate our privacy and freedom and reinforce existing biases.

Pricing and the internet

150 years ago most western sellers ended the practice of constant haggling in the marketplace by 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 likely be prepared to pay.

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

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 to subsidize the poor. Unfortunately, however, it appears that many businesses are employing it in an unfair an unethical manner in the largely unregulated 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.

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.

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 operate to reinforce the biases that already exist in society.

Our Response

This is a critical situation which requires an urgent multi-faceted response by individuals, the government and our society as a whole.

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 proportion of people who are cognizant of this issue and its implications through first person conversations.

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.

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 choose to share it with. If Facebook and Google cannot be trusted with data, we must switch to more secure options to communicate and disclose things about ourselves. It follows that 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, attribution and analysis of any necessary data collected. It should also impose laws that require search engines and algorithms to be more transparent and responsible.

I am cautiously optimistic that these changes can occur in time to preserve a free market. I do not expect that every person will choose to reject convenient platforms and apps, but a majority will likely 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.

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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