Why do Companies Want Your Data? In Order to Gouge You, says Open Markets’ Phil Longman
April 8, 2019
Washington, D.C. — In a feature published today in the Washington Monthly, Open Markets’ Policy and Editorial Director Phil Longman draws attention to the mounting problem of price discrimination on the internet. Corporations are wringing every penny from your purchases by offering you unique prices and terms service based on their surveillance of your personal online data. Longman shows how the problem is made much worse by the rise of monopoly power throughout the economy, which leave buyers with less and less recourse when they face price discrimination.
With rapid technological innovations in data collection and artificial intelligence, it’s only becoming easier for companies to figure out what is the maximum you will pay for a good or service. The U.S. government should tackle price discrimination against individuals directly, just as it attacks discrimination based on categories such as race or gender. Attacking the problem also requires, Longman argues, stricter enforcement of anti-monopoly laws.
The article is excerpted below and can be read in full here.
Corporations have no intrinsic interest in invading your privacy… the real reason corporations want more and more of your personal data is because they are after something that businesses have coveted for millennia but could only imperfectly pull off… What they most want to know is the maximum you’ll pay today for whatever they have on offer. […]
When people try to sell their wares on Amazon… they have to accept the terms Amazon offers. Indeed, these days many can’t reach the customers they need except through Amazon, which makes it very hard for them to say no when, for example, Amazon suggests it’s time to fork over more money so it doesn’t bury their offers at the bottom of every search. And because Amazon effectively has the ability to look into their cash registers, it has deep knowledge of just how much they can afford to pay. It can use this knowledge to wring more money from sellers. On current trends, these forms of discrimination are poised to get far worse.
A… highly important reason is the increasing degree of corporate concentration found throughout the economy. Engaging in egregious price discrimination doesn’t work very well when customers can easily take their business elsewhere. But for monopolistic corporations—which increasingly know that you have no real choice but to deal with them—price discrimination is both possible and highly lucrative.
[…] A better approach would begin by attacking price discrimination directly. Indeed, it’s the traditional American approach to dealing with monopolistic corporations that know too much about their customers’ business. It’s useful to recall that railroads, especially at the peak of their power at the turn of the twentieth century, had a lot in common with today’s tech giants.
… Controlling these platforms like we once controlled railroads would begin by requiring them to publicly list their terms and prices and to justify any that discriminated against or in favor of different users. Discrimination against individuals would be flatly illegal. Discrimination against different classes of customers would sometimes be permitted but would have to be shown to serve the public interest. […]
We also need to restore rigorous antitrust action to prevent or unwind horizontal mergers, whether they’re between airlines or cable companies or drug manufacturers. Discriminating against you in the marketplace doesn’t really work if you can just take your business elsewhere. And if corporations can’t engage in price discrimination, they have much less reason to violate your privacy.
Press Contact: Stella Roque at Open Markets Institute, [email protected]