Algorithms can predict just how much we’ll pay to get a Big Mac delivered at 2 a.m. For at least some Canadians, companies soon won’t be allowed to use that eerily accurate capability to gouge you during your hours of desperation.
What happened: Manitoba’s government has introduced a bill that would ban companies from setting different prices for different customers based on their personal data. Penalties for violations range from $300,000 fines for corporations to potential jail time for individuals.
“I think Manitoba is kickstarting a national conversation about this practice in terms of how it happens and whether and when it should be permissible,” Shield Institute managing director Vass Bednar told The Peak. “While firms may be eager to engage in this practice, they are less eager to be up front with Canadians about it. Ultimately, this is a privacy failure that everyday people are paying for.”
Zoom out: Personalized pricing based on everything from internet activity to location to purchase history has become an increasingly common practice, especially for online businesses. One consumer trend analyst told Fortune, “The era of 'fair' pricing is over. The price you see is the price the algorithm thinks you’ll accept.”
Lawmakers in California, New York, Hawaii, and other U.S. states have taken similar steps to protect against algorithmic pricing for everything from rent to groceries.
Instacart is being investigated for allegedly charging some of its customers up to 23% more for the same product as their peers. Meanwhile, Walmart just won U.S. patents that pave the way for its automated systems to have more sway over setting prices.
Why it matters: Pricing in the age of AI algorithms and data mining has become a black box — we often have no idea what other people are being charged for the same thing as us. This legislation could be a step towards making prices more transparent, and ultimately making it more difficult for companies to surreptitiously overcharge their customers.—LA