CAMP Opening Statement to the House of Commons Standing Committee on Access to Information, Privacy and Ethics on its Study of the Use of Artificial Intelligence in Algorithmic Pricing 

Thank you, Chair, and thank you to the members of the committee for inviting me to speak with you today.

My name is Keldon Bester and I’m the Executive Director of the Canadian Anti-Monopoly Project. We’re a think tank working to build an economy where markets work for the people who depend on them.

I commend the committee for undertaking this study, especially now. Whatever the name – algorithmic pricing, surveillance pricing, or personalized pricing – the ability to set a different price for each customer, or wage for each worker, is already here.

Exactly when Canadians are subject to algorithmic pricing is often unclear, and that’s part of the problem. But as artificial intelligence capabilities make these pricing strategies cheaper and easier to apply, we should expect algorithmic pricing to become more widespread.
When algorithmic pricing does come to light, the results can be shocking. Research out of the U.S. last year found that Instacart was showing some shoppers prices up to 23 per cent higher than other customers for the same goods, in the same store, at the same time.

With results like these, it’s no surprise that Canadians are deeply skeptical of algorithmic pricing. Survey results show that when Canadians learn companies can change prices based on demand, browsing behaviour, customer profiles, or other personal data, they react strongly against the practice.

Over half of Canadians think it’s unfair, and the same share believe the practice should be banned outright. Another 30% believe it should be allowed, but only if more strictly regulated. That’s more than eight in ten Canadians who want action on algorithmic pricing.

But over the course of this study, you’ll likely hear three arguments for why Canadians are misguided and why there’s nothing to worry about when it comes to algorithmic pricing. Companies will claim they do not use algorithmic pricing and do not plan to do so in the future. But a public commitment is not a contract. As these tools get cheaper, more companies will be tempted to try them on for size. Interim results from a study by the U.S. Federal Trade Commission found companies offering algorithmic pricing solutions already had clients in a wide range of markets including grocery stores, clothing stores, hardware stores, and more.

Companies will also claim that these tools will only be used to offer customers, especially lower-income customers, lower prices. But the end point of first-degree price discrimination, the economist’s term for algorithmic pricing, is not to offer the lowest price. It is instead to charge each customer the most they are willing to pay, whatever their circumstance, maximizing the value captured by the company.

Finally, companies will claim that prohibitions on algorithmic pricing would stop them from offering familiar discounts, like cheaper matinee tickets or senior and student discounts.

Here, the contrast between algorithmic pricing and other forms of discount pricing is important. Our concern is with the opaque customization of prices for individual
consumers or groups of consumers based on their personal data. Canada can learn from laws introduced elsewhere to stop the practices Canadians recoil from without risking the discounts they value.

Through this study, this committee can better understand the prevalence of algorithmic pricing in our economy and respond to Canadian’s desire for action in defense of their
economic interest.

In conducting this study, we suggest that the committee do three things:

• Look beyond the use of artificial intelligence in algorithmic pricing, instead focusing on the broader practice, whatever technology enables it.
• Include the setting of wages in your definition of algorithmic pricing, another way in which firms can extend their control over not just customers, but workers as well.
• And finally, we encourage you to consider how updates to federal private sector privacy law can prevent the application of algorithmic pricing and the data collection that feeds the practice.

Canadians are right to distrust algorithmic pricing. It represents an erosion of the fair and open pricing our economy relies on. In studying the topic, this committee can play an important role in ensuring that when companies set their pricing, Canadians are always
offered a fair deal.

Thank you for your time and I look forward to your questions