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Will “surveillance pricing” help or harm consumers?

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2024-08-14 14:30:08

Lindsay Owens, economic sociologist. Executive director of the Groundwork Collaborative, a DC-based progressive think tank focused on public policy.

MEGHNA CHAKRABARTI: Back in the year 2000, Amazon launched a quiet little experiment. For six days, between August 31st to September 5th, Amazon varied prices on 68 DVDs. DVDs. It tells you how far back this was. But anyway, the prices varied from customer to customer for the same DVD, but people felt something didn't quite smell right.

So they compared prices in chat rooms and were outraged. Amazon issued refunds to almost 7,000 customers because of this. The company also issued an apology. "This random testing was a mistake, and we regret it," founder Jeff Bezos said in a statement. Quote, "We've changed our policy to protect customers."

And then he added this clarification, quote, "We never tested, and we'll never test prices based on customer demographics." A quarter century later, that customer uprising kind of seems almost quaint, doesn't it? These days, Amazon changes prices across its platform millions of times a day, but the company insists, just as Bezos did back in 2000, that it never changes those prices based on customer demographics. Dynamic pricing is still based on that ancient economics fundamental of supply and demand. Even if the way that demand is measured, and exactly how a market is defined, has become much more precise and personalized than ever.