Picture the scene: you and your partner are looking forward to the holiday of a lifetime, which you’ve taken the lead in planning. You’re about to book your trip to Thailand when you realise the flight price is listed as £250 more on your phone than it is on theirs – same phones, same website, same flights, same itinerary. Why the disparity?
Short answer, your digital footprint – something each and every one of us has – is working against you. In 2014, the US Department for Transportation sanctioned airlines and travel agencies to collect personal user data – including nationality, marital status, address and travel history – to tailor fares, which it claimed allowed “more agile pricing and more personalised offerings”. A blunter term to describe it would be price discrimination – also known as “personalised pricing” – the practice of charging would-be digital customers differing prices based on their perceived willingness to cough up.
Like what you’re reading? Get the free UnHerd daily email
Already registered? Sign in
Of course, price discrimination has existed for decades outside of cyberspace in the form of early-bird specials for the elderly, or knock-off rates for students, but on the internet you shed the relative anonymity you have on the high street. You’re no longer part of a broad-brush vision of what a potential customer looks like, because online businesses already possess intimately detailed accounts of who you are, what you like and how much money they think you’re willing to spend with them. If it sounds ominous, that’s because it is.
These nebulous marketing practices build profiles of your habits and interests to better target adverts and search results for products, platforms or services directly at you. This data ranges from the basic – the kinds of websites you visit, how long you stay there, your IP address, your location and the type of device you’re using – to the extremely sensitive – health and financial info, your sexual orientation, age, income, parental status.
If that doesn’t sound sinister enough, the vast majority of this data is collected without your knowledge or consent, via cookies (text files which collect and store information including user names and browsing history), your IP address and tracking scripts which monitor your web browsing across sites, among other methods. In the case of the Thailand price disparity, the airline knows you’ve been looking regularly at flights between London and Southeast Asia, and therefore feels it can get away with charging you a higher amount. Every click, every new page opened, every refresh is probably being tracked.
I say probably, because there’s no definitive way of knowing. Businesses are incredibly secretive about how they track consumers across the web, which is partly down to wanting to keep their competition in the dark, but mostly down to fear of widespread customer backlash.The recent outrage over consultancy firm Cambridge Analytica’s alleged misuse of 50 million Facebook users’ personal information, taken without permission and reportedly used to create personalised adverts during the 2016 US Presidential election, demonstrates the potential pitfalls for companies who are less than forthcoming about their intentions for the data they collect. It’s little wonder consumers are losing faith in Big Tech.
The few concrete examples we have of internet businesses exercising digital price discrimination have been met with public anger, making the perpetrators even less likely to admit to dabbling with it in the future. In 2012, a Wall Street Journal investigation found that the website of stationer Staples displayed varying prices depending on the potential customer’s proximity to a competitor. Online travel company Orbitz was accused of directing Apple Mac-using visitors to higher-priced hotel rooms than visitors using PCs. The reasoning behind this, the WSJ claimed, was because Orbitz had determined Mac owners were inclined to spend 30% more per night on hotels.
Similarly, a 2014 study by Boston’s Northeastern University found Walmart and Home Depot were among numerous online retailers modifying the price of products in direct relation to consumers’ browsing history. Even Amazon, back in 2000, was caught charging returning customers higher prices for items than new visitors, which chief executive and founder Jeff Bezos attributed to “a random price test”, adding the company had “never tested and we never will test prices based on customer demographics”.
Some people might argue the moderation of prices based on a shoppers’ perceived ability to pay is a form of digital democracy, charging the rich to subsidise the poor. The rest of us see it as commercial extortion, fueled by covert tracking of information (which may not even be correct) to manipulate us into paying over the odds. What’s more, the sweeping reforms promised by the European Union’s forthcoming GDPR (General Data Protection Regulation) – stating user consent to cookie tracking must be clearly given – are unlikely to force firms to explicitly tell us the kind of data they’re collecting on us, and what it’ll be used for. As tracking techniques advance, marketing strategies will likely be built around tracking our moods, creating a Big Brother-esque, price-fluctuating digital dystopia.
Just as the rise of fake news forced social media firms to address their own responsibilities in circulating misinformation, the mounting anger over the Cambridge Analytica scandal should force internet giants and retailers to be more transparent in their data collection and retention methods.The tide of public opinion is turning, and consumers are fed up of being treated like cash cows. While data is important, so is trust. Lose the latter, and you’ll find yourself without the former.