Lina Khan says the FTC is investigating surveillance pricing. Here’s how that could affect you
A family member on the other side of the country has died and you need an airline ticket to go to the funeral. You’ve been handling all of these details on your phone or computer—where nothing is truly private anymore—and when you go to buy that ticket, you’re charged a higher price. This scenario is a hypothetical example of surveillance pricing, a practice that’s now on the radar of the Federal Trade Commission (FTC), as Chair Lina Khan shared during last week’s Fast Company Innovation Festival. “Given just how much intimate and personal information that digital companies are collecting on us, there’s increasingly the possibility of each of us being charged a different price based on what firms know about us,” she said during a conversation with Brendan Vaughan, Fast Company’s editor-in-chief. In July, the FTC launched an inquiry into surveillance pricing to learn more about the products and services that use personal information—including someone’s finances and browser history—to determine prices for different consumers for the same goods or services. As part of the inquiry, the commission ordered eight companies to share information about their practices. Those companies are: Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co. The goal of this inquiry, Khan said during the Fast Company festival, is to better understand if and how often surveillance pricing is currently happening. The FTC is seeking further information from those eight companies related to four major areas: the types of products and services being offered, data collection and inputs, customer and sales information, and the impacts on consumers and prices. Khan also shared two other hypothetical examples of price discrimination: a company charging a family higher prices for nut-free granola bars because it knows one of the children has a nut allergy, or a restaurant showing diners personalized menus via QR codes. “I don’t think we want to wake up one day where this is just now the new normal,” she said. “I think we want to be able to figure out: Is this really an economy and society that we want to be living in, or do we want some guardrails?” Khan has already established a reputation for going after Big Tech, and this latest inquiry may further rankle the industry. The inquiry into surveillance pricing touches on some well-known concerns about tech privacy, while also focusing on the potential impact to consumers. Of concern, Khan mentioned, consumers have grown accustomed to dynamic pricing, such as with ride-sharing, in which companies can charge different prices based on supply and demand. Khan noted that surveillance pricing is different because it’s tied to what information companies know about you and what they can get away with charging. Still, she said, dynamic pricing may have “destabilized” the idea that we should all be charged one price at any given time, and “that could have been foaming the runway, if you will, for price discrimination.” Though no formal FTC action is planned at this time, Khan said the goal is to better understand this pricing ecosystem. “We’ll be very eager to see what we learned there,” she said.
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A family member on the other side of the country has died and you need an airline ticket to go to the funeral. You’ve been handling all of these details on your phone or computer—where nothing is truly private anymore—and when you go to buy that ticket, you’re charged a higher price.
This scenario is a hypothetical example of surveillance pricing, a practice that’s now on the radar of the Federal Trade Commission (FTC), as Chair Lina Khan shared during last week’s Fast Company Innovation Festival.
“Given just how much intimate and personal information that digital companies are collecting on us, there’s increasingly the possibility of each of us being charged a different price based on what firms know about us,” she said during a conversation with Brendan Vaughan, Fast Company’s editor-in-chief.
In July, the FTC launched an inquiry into surveillance pricing to learn more about the products and services that use personal information—including someone’s finances and browser history—to determine prices for different consumers for the same goods or services. As part of the inquiry, the commission ordered eight companies to share information about their practices. Those companies are: Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co.
The goal of this inquiry, Khan said during the Fast Company festival, is to better understand if and how often surveillance pricing is currently happening. The FTC is seeking further information from those eight companies related to four major areas: the types of products and services being offered, data collection and inputs, customer and sales information, and the impacts on consumers and prices.
Khan also shared two other hypothetical examples of price discrimination: a company charging a family higher prices for nut-free granola bars because it knows one of the children has a nut allergy, or a restaurant showing diners personalized menus via QR codes.
“I don’t think we want to wake up one day where this is just now the new normal,” she said. “I think we want to be able to figure out: Is this really an economy and society that we want to be living in, or do we want some guardrails?”
Khan has already established a reputation for going after Big Tech, and this latest inquiry may further rankle the industry. The inquiry into surveillance pricing touches on some well-known concerns about tech privacy, while also focusing on the potential impact to consumers.
Of concern, Khan mentioned, consumers have grown accustomed to dynamic pricing, such as with ride-sharing, in which companies can charge different prices based on supply and demand.
Khan noted that surveillance pricing is different because it’s tied to what information companies know about you and what they can get away with charging. Still, she said, dynamic pricing may have “destabilized” the idea that we should all be charged one price at any given time, and “that could have been foaming the runway, if you will, for price discrimination.”
Though no formal FTC action is planned at this time, Khan said the goal is to better understand this pricing ecosystem. “We’ll be very eager to see what we learned there,” she said.
