There has been a surge of concern and interest in the threat of “surveillance pricing,” in which companies leverage the enormous amount of detailed data they increasingly hold on their customers to set individualized prices for each of them — likely in ways that benefit the companies and hurt their customers. In my previous post on this, I suggested a paradigmatic case: an airline, knowing that you’ve had a death in your family, jacks up the price they offer you for a flight to your loved one’s funeral.
Consumers will fight back — but can they win?
There are good reasons to wonder to what degree companies can make this work, however. Beyond the fact that, like price gouging in emergencies, it is showing signs of being very politically unpopular, consumers will have strategies for combatting it. A world with surveillance pricing will create all kinds of gamesmanship. On airline ticket pricing, that gamesmanship might run like this:
YOU: If an airline’s prices seem high just when you need a ticket the most, you try to look at their flights without signing in to their site.
AIRLINE: Uses cookies or your IP address to figure out who you are.
YOU: Clear your cookies, and use a VPN to disguise your IP address.
AIRLINE: Use device fingerprinting to identify you nonetheless.
YOU: Switch computers to defeat such fingerprinting.
AIRLINE: Refuses to show you prices at all unless you provide the actual, government-mandated identity that you will use when you fly (“Log in to see price”).
YOU: Ask a friend to look at prices for you, and possibly buy you a ticket (currently permitted).
AIRLINE: Obtains your contact list — a common set of data grabbed by companies — figures out what’s going on (perhaps aided by AI), and charges your friend the high price too.
YOU: Try a more distant friend.
People could even organize online so unrelated strangers can check prices for each other. Or formal services to facilitate that might emerge.
At least in the airline context I suspect people are going to find out what prices are being offered to others, and they’re not going to like it. But the airlines may just ride out the discontent. Most shoppers don't have the tech savvy or time to defend themselves. And let’s note that the Trump Administration terminated the FTC’s research into this issue, and that business interests, whose political power has reached historic highs not seen since the first Gilded Age, are likely to try to block legislative attempts to ban these practices.
Whether or not the airlines can get away with surveillance pricing, it’s likely to continue in other markets — perhaps those that are lower profile, less noticeable, involve smaller-ticket goods, less sophisticated buyers, or where people pay less attention and compare notes less often. That might be phone and Internet, repair services, groceries, and online products, services, and subscriptions, and many other things.
And where these practices become persistent, and consumers become aware of them, people will be incentivized to fight back — and many will. The central battle in such efforts will be around identity: do the companies whose prices you are checking or negotiating know who you are? Can you stop them from knowing who you are? Unfortunately, one day not too far in the future, you may lose the ability to do so.
Digital IDs could kneecap attempts to evade surveillance pricing
Many states around the country are creating digital versions of their state driver’s licenses. While that might sound like a simple thing, it is anything but. Digital versions of IDs allow people to be tracked in ways that are not possible or practical with physical IDs — especially since they are being designed to work not just in face-to-face transactions but also online. They make presenting ID much easier and frictionless, especially online, where you are likely going to be able to share your ID at the touch of a button. Apple and Google have already launched products built on state IDs. But because digital IDs are so easy to share, it will be much easier for companies to request — and eventually demand — that people share their IDs in order to engage in all manner of transactions.
Few of those pushing for digital IDs are pushing lawmakers to protect us from this predictable consequence of the technology. There are very good reasons to fear we’ll be bombarded with ID demands at every turn, and may have little choice but to click “yes” to access a service — and perhaps to tap our phones just to enter physical stores.
Unlike email/username/password logins, these will be fully DMV-vetted, cryptographically locked-down digital files that will inescapably identify us to the companies we share them with. They could become “super-cookies” that bring to a decisive end all the cat-and-mouse games that I outlined above. Insofar as digital ID usage becomes normalized, companies will 100% know who you are; there will be no changing usernames and passwords or using pseudonyms. No resetting your relationship with the company, or erasing their memory of you. You can’t run to the DMV to ask for a fresh identity.
That will make it far harder to escape surveillance pricing. It will make it easier for companies to collect data about us, merge it with other data, and analyze it, all with high confidence that it pertains to the same person — and then recognize us when we show up to make a purchase, run the data through an algorithm, and execute their price-maximizing strategy against us.
Digital IDs and surveillance pricing would also be mutually reinforcing. Not only would digital IDs prevent people from escaping surveillance pricing, but surveillance pricing would simultaneously incentivize companies to force the presentation of digital IDs by people who want to shop.
The ACLU is fighting to raise the alarm about this incipient identity infrastructure and trying to persuade state legislatures to pass protections to stop this world from coming about. But so far, it still looks like there’s a good chance we’ll end up with the worst-case scenario.
There are many reasons not to embrace a digital identity system — at least, one that lacks the very strongest privacy safeguards — and the prospect of surveillance pricing is a big one.
