AAUW PUBLIC POLICY CONVERSATIONS – NOVEMBER 2024
134 Years ago the overwhelming power of monopoly companies had to be reined in. Congress passed the SHERMAN ANTI-TRUST Act. These monopoly businesses colluded behind closed doors to fix and jack up prices. Today the same thing is happening again, only our high tech monopoly businesses are using algorithms and A.I. to fix prices. Minnesota Senator Amy Klobuchar said, “Companies are sharing confidential data via algorithms just as they once did in smoke-filled rooms.” To combat this, last February she introduced her bill, the PREVENTING ALGORITHMIC COLLUSION Act.
Algorithmic collusion is where companies illegally coordinate to raise prices through the use of an algorithm that they supply their data to. Each company has its own contract with the algorithmic provider who then uses the companies’ data to make pricing recommendations. These pricing recommendations then make them all richer – at the expense of their customers. The invisible hand is replaced by the digital hands. The algorithm learns on its own to collude.
Firms today store a vast trove of personal information about their customers including credit information, location and all your browsing history. Federal Trade Commission Chair Lina Khan said that “Firms that harvest Americans’ personal data can put people’s privacy at risk. Americans deserve to know whether businesses are using detailed consumer data to deploy SURVEILLANCE PRICING.”
The F.T.C. ordered 8 companies to provide information on surveillance pricing practices this summer. The F.T.C. is investigating whether firms are using their immense collected personal data to CHARGE DIFFERENT PEOPLE HIGHER PRICES. This means they can charge different customers different prices for the same goods or services.
How would you know whether you are paying $50 more for the same item your neighbor ordered for $50 less based on the personal data that’s already been collected about you? Chairwoman Khan said, “The F.T.C. inquiry will shed light on this shadowy eco-system of pricing middlemen.”
In the meantime we can contact our Senators Casey and Fetterman to become co-sponsors of the PREVENTING ALGORITHMIC COLLUSION Act.
Lilly Gioia