The advent of big data, artificial intelligence, and the ubiquity of our digital footprints have made it easier to identify consumer preferences and price points.
And the Justice Department’s top antitrust official just issued a stern warning to companies that may be trying to set prices on a case-by-case basis.
During interview with the New York Times released Saturday, Assistant Attorney General Jonathan Kanter was asked about dynamic pricing, or the practice of quickly changing prices based on market conditions, often during a specific time of day.
“Companies are increasingly understanding how to maximize profits,” he responded. “The more information they have about who you are and how much you are willing to pay, the more they can charge you. I think the ability to do this on an individual level is leading to greater extraction of monopoly power than has ever been seen in history.”
This comes after fast-food chain Wendy’s said earlier this year that it would test dynamic pricing enabled by new digital menu boards. After widespread public backlash, the company clarified that this is different from “high pricing.” Wendy’s added that digital menus could allow the company to offer discounts at slower times of day.
Meanwhile, Walmart will replace its sticker price tags with digital screens by 2026, saying the move will mean that “price changes that previously took an employee two days to update now take just minutes.”
But the world’s biggest retailer also insisted it was not introducing dynamic pricing, saying it went against one of the company’s core commitments to offering “everyday low prices”.
“It’s absolutely not going to be, ‘One hour it’s this price and the next hour it’s not,'” Greg Cathy, senior vice president of transformation and innovation at Walmart. said Reuters during the company’s annual meeting of shareholders in Bentonville, Arkansas, earlier this month.
Meanwhile, Kanter also reported The newspaper “New York Times that the use of artificial intelligence in determining prices is also a concern. When asked if he views AI tools reporting prices the same way as humans colluding on prices, he responded, “If your AI is fixing prices, you have the same responsibility.”
“If anything, the use of artificial intelligence or algorithm-based technologies should concern us more because it is much easier to set prices when you outsource it to an algorithm rather than when you are sharing manila envelopes in a smoke-filled room,” added He.