Latest / Masters in Business / At The Money: Is Technology Price Gouging Consumers?

Transcript

At The Money: Is Technology Price Gouging Consumers? · Masters in Business

• 0:02
  Speaker 1: Bloomberg Audio Studios. Podcasts.
• 0:05
  Speaker 2: Radio.
• 0:06
  Speaker 1: News.
• 0:26
  Speaker 2: The war in Iran, tariffs, higher interest rates... Lots of
• 0:32
  Speaker 2: things are driving prices higher. But what about algos and
• 0:36
  Speaker 2: AI and other technologies we use every day? Might they
• 0:40
  Speaker 2: also be sending prices higher? To help us unpack all
• 0:44
  Speaker 2: of this and what it means for your wallet, let's
• 0:47
  Speaker 2: bring in Lindsay Owens. She is CEO of the Groundwork Collaborative,
• 0:52
  Speaker 2: an economic think tank in D.C., and former economic policy
• 0:57
  Speaker 2: advisor to Senator Elizabeth Warren and She is also the
• 1:01
  Speaker 2: author of a brand new bestseller, Gouged, The End of
• 1:05
  Speaker 2: a Fair Price and What That Means for Your Wallet.
• 1:10
  Speaker 2: So let's start with the basic theme of the book. Hey,
• 1:14
  Speaker 2: price gouging isn't anything new. It's been going on for forever.
• 1:18
  Speaker 2: But the technology that allows faster, more subtle, and more
• 1:24
  Speaker 2: hidden price gouging to take place is what's new. How
• 1:29
  Speaker 2: has technology made fair prices and competition almost obsolete?
• 1:35
  Speaker 1: Yeah, well, thanks for having me. This is a great
• 1:37
  Speaker 1: question to start with. Look, of course, the impulse to
• 1:41
  Speaker 1: make a buck is not new. It's age old. What's
• 1:45
  Speaker 1: new are the technologies at companies' disposal. But it's also
• 1:49
  Speaker 1: the case that pricing used to be pretty straightforward. You
• 1:52
  Speaker 1: figure out how much it costs to make the item.
• 1:55
  Speaker 1: You add your profit margin on top. You put a
• 1:57
  Speaker 1: sticker on it. You set it on the shelf. You
• 1:59
  Speaker 1: forget it. Not anymore. Today, pricing is a highly engineered science.
• 2:04
  Speaker 1: Companies hire armies of pricing consultants. They hire physicists. They
• 2:10
  Speaker 1: acquire AI companies all to help them get better customers.
• 2:15
  Speaker 1: at squeezing you and reaching further into your wallet. And
• 2:19
  Speaker 1: so the book really examines a whole host of ways
• 2:22
  Speaker 1: that new technologies have supercharged older corporate tricks.
• 2:29
  Speaker 2: So everybody experienced that inflation moment during the pandemic. You
• 2:35
  Speaker 2: couldn't get bleach or toilet paper and all these things
• 2:37
  Speaker 2: went up in price. I'm curious when you had that
• 2:41
  Speaker 2: aha moment where, hey, this is more than just companies
• 2:46
  Speaker 2: raising prices. Something in the marketplace has fundamentally changed.
• 2:51
  Speaker 1: Yeah, look, I wasn't alive during the last period of
• 2:53
  Speaker 1: high inflation. We just lived through the first period of
• 2:56
  Speaker 1: inflation in 50 years. So this was a new experience
• 3:00
  Speaker 1: for me as a human, but also as someone who
• 3:03
  Speaker 1: thinks and studies economic policy. And I wanted to understand
• 3:08
  Speaker 1: how businesses were navigating inflation. So I listened in on
• 3:12
  Speaker 1: their earnings calls with their investors. And what I was
• 3:15
  Speaker 1: surprised to hear is companies were quite bullish on their
• 3:19
  Speaker 1: ability to navigate inflation. They felt like they were going
• 3:22
  Speaker 1: to be able to pass along their rising costs and
• 3:24
  Speaker 1: even go for more in some cases. But as I
• 3:27
  Speaker 1: started digging into that research more deeply over 2021, 2022,
• 3:31
  Speaker 1: and even into 2023, Something else started to stick out
• 3:37
  Speaker 1: to me as well. The way in which companies were
• 3:40
  Speaker 1: describing their pricing techniques had changed. They were talking about
• 3:44
  Speaker 1: their new price optimization and revenue management systems, their new
• 3:48
  Speaker 1: yield management systems. They were talking about new technologies, dynamic
• 3:54
  Speaker 1: pricing and electronic shelf labels in the grocery store. at
• 3:58
  Speaker 1: the drive-thru line. And I started to think, hmm, there's
• 4:02
  Speaker 1: really something here. This isn't just high prices. This is
• 4:05
  Speaker 1: a shift in the infrastructure and the sort of mechanisms
• 4:11
  Speaker 1: of pricing. And I want to learn more. And that's
• 4:14
  Speaker 1: really what got me going down the rabbit hole that
• 4:17
  Speaker 1: ended up as Gouged, my new book.
• 4:20
  Speaker 2: So one of the things in the book that I
• 4:22
  Speaker 2: found outrageous, although I bet a lot of us found
• 4:25
  Speaker 2: it outrageous if we followed the story when it was breaking,
• 4:29
  Speaker 2: was the Yieldstar algorithm. That is a company named RealPage
• 4:34
  Speaker 2: that effectively engaged in what turned out to be price collusion.
• 4:40
  Speaker 2: The software allowed coordination from all these supposedly competitive companies.
• 4:45
  Speaker 2: landlords and ultimately created a floor, no pun intended, for rents,
• 4:51
  Speaker 2: a hard floor that nobody could lower rents below, stopping competition.
• 4:56
  Speaker 2: Tell us about RealPage.
• 4:59
  Speaker 1: Yeah, so RealPage is super interesting because what it represents
• 5:03
  Speaker 1: is sort of an exponential shift in what's possible for
• 5:09
  Speaker 1: price fixing and collusion. Look, if you wanted to collude
• 5:14
  Speaker 1: in the olden days, you would need to gather up
• 5:17
  Speaker 1: all your competitors, get together in a hotel room or
• 5:22
  Speaker 1: a conference room, you know, pour some scotch and hatch
• 5:25
  Speaker 1: a deal to keep prices high, align prices. And, you know,
• 5:29
  Speaker 1: you need a little bit of trust. You got to
• 5:31
  Speaker 1: make sure one of you isn't going to defect, right?
• 5:35
  Speaker 1: And sort of undercut all of the rest. And everyone
• 5:38
  Speaker 1: needs to lock arms and hike prices together. Well, that
• 5:41
  Speaker 1: requires a lot of coordination. It's probably only possible in
• 5:44
  Speaker 1: industries that only have a few major players. Well, today,
• 5:48
  Speaker 1: thanks to algorithms, even in industries with many players, like
• 5:52
  Speaker 1: the residential real estate market, where there are, you know,
• 5:56
  Speaker 1: in any given city, thousands of landlords, thousands of different
• 6:00
  Speaker 1: types of units, thousands of buildings, you know, it would
• 6:05
  Speaker 1: have been hard to put together a price fixing scheme.
• 6:08
  Speaker 1: But now there's software for that. And landlords can join
• 6:14
  Speaker 1: in on what could amount to a price-fixing conspiracy with
• 6:19
  Speaker 1: the tap of their iPhone. And Yieldstar, the revenue management
• 6:22
  Speaker 1: software that RealPage acquired, allows landlords to share competitively sensitive
• 6:29
  Speaker 1: information about floor plans and amenities and price points. But
• 6:33
  Speaker 1: it also spits out recommended rents. Now, of course, in all...
• 6:38
  Speaker 1: the landlords don't have to take those recommendations. But many
• 6:41
  Speaker 1: landlords opted into the default mode where they basically did
• 6:44
  Speaker 1: take the recommendations. And so in late 2024, the Biden
• 6:50
  Speaker 1: administration's head of the antitrust division at the Department of
• 6:53
  Speaker 1: Justice brought an alleged price fixing conspiracy charge against RealPage.
• 6:59
  Speaker 1: And my book actually opens with the Federal Bureau of
• 7:03
  Speaker 1: Investigation's Don Raid into one of the big developers, Cortland
• 7:07
  Speaker 1: Management in Atlanta, Georgia, who was using the RealPage software.
• 7:12
  Speaker 2: How much was RealPage impacting rents and what was the
• 7:18
  Speaker 2: outcome of that case?
• 7:20
  Speaker 1: Yeah, so they ultimately settled with the Trump administration, who
• 7:24
  Speaker 1: I would argue was a bit of a slap on
• 7:26
  Speaker 1: the wrist. But they did curtail some of the most
• 7:30
  Speaker 1: egregious aspects of RealPage. Interestingly, RealPage wasn't just a tech company.
• 7:35
  Speaker 1: They were also facilitating in-person meetings with landlords. And the
• 7:40
  Speaker 1: Trump administration said, you can't do the meetings anymore. And
• 7:43
  Speaker 1: RealPage used a team of pricing advisors— who were kind
• 7:47
  Speaker 1: of the brawn, if the algorithm was the brain, the
• 7:50
  Speaker 1: pricing advisors would sort of make sure that the landlords
• 7:53
  Speaker 1: were taking the prices, you know, call them and say, look,
• 7:56
  Speaker 1: you got to trust the science. You got to take
• 7:58
  Speaker 1: these prices. And, you know, the Trump administration says the
• 8:01
  Speaker 1: pricing advisors are not allowed to share competitively sensitive information. Now,
• 8:08
  Speaker 1: that's going to be pretty hard to enforce in practice,
• 8:10
  Speaker 1: because if you're a human and you know something, it's
• 8:13
  Speaker 1: hard to remember who you learned it from and not
• 8:17
  Speaker 1: to share it. So we'll see kind of what happens
• 8:20
  Speaker 1: with RealPage over the next few years. But by some estimates,
• 8:25
  Speaker 1: RealPage's impacts on rental markets could be as much as
• 8:29
  Speaker 1: like $ 120 a month.
• 8:31
  Speaker 2: Wow, that's real money. It's interesting how you describe the
• 8:37
  Speaker 2: advisors coming in. Kind of reminds me of the consultants, right?
• 8:42
  Speaker 2: So instead of having the CEO of Coke and Pepsi
• 8:45
  Speaker 2: in a room, you have a go-between with the same
• 8:49
  Speaker 2: consultants that advise Coke and Pepsi and everybody else. How
• 8:53
  Speaker 2: is that anything but price fixing? How is that anything
• 8:57
  Speaker 2: but non-competition?
• 8:59
  Speaker 1: Yeah, I mean, look, price fixing has gone really high tech.
• 9:04
  Speaker 1: Companies are working with new startups who are helping them
• 9:11
  Speaker 1: get better and more aggressive with their pricing. They tell
• 9:14
  Speaker 1: them when to raise their prices. They tell them when
• 9:16
  Speaker 1: to hold firm and not lower their prices. They track competitors' prices.
• 9:25
  Speaker 1: It's a really extensive industry at this point.
• 9:27
  Speaker 2: So I am much older than you, and I have
• 9:30
  Speaker 2: a very vivid recollection of antitrust law kind of being, okay,
• 9:36
  Speaker 2: we're not going to enforce this anymore. from back in
• 9:39
  Speaker 2: the 1980s, and here it is 40 years later, and
• 9:45
  Speaker 2: we've seen two things happen as a result, massive consolidation
• 9:50
  Speaker 2: in various industries and significant competition either being restricted or
• 9:57
  Speaker 2: drying up. Think about airfares, concert tickets are probably the
• 10:01
  Speaker 2: most egregious one, but even things like food, liquor, automobiles,
• 10:07
  Speaker 2: it seems like we've allowed all these companies to buy
• 10:10
  Speaker 2: each other and there's no one left to compete against
• 10:13
  Speaker 2: on price.
• 10:14
  Speaker 1: Yeah, absolutely. Concentration in our economy, 75% of industries more
• 10:20
  Speaker 1: concentrated now than they were a generation ago, is terrible
• 10:25
  Speaker 1: for prices. And it is really hard to overcharge you
• 10:29
  Speaker 1: if you can walk across the street and get a
• 10:31
  Speaker 1: better deal. And so as competition shrinks, as consolidation increases,
• 10:38
  Speaker 1: it's really a petri dish for these, you know, more
• 10:43
  Speaker 1: sinister and nefarious pricing technologies. But some of what these
• 10:47
  Speaker 1: technologies also enable is the restriction, the seeming restriction of competition,
• 10:53
  Speaker 1: even in markets that are more competitive. So when you're
• 10:56
  Speaker 1: being offered a personalized price, if a company selects a
• 11:00
  Speaker 1: price just for you, how are you going to comparison
• 11:03
  Speaker 1: shop if you're not actually being offered the standard price?
• 11:07
  Speaker 1: And of course, comparison shopping is sort of the mechanism
• 11:10
  Speaker 1: through which competition keeps prices in check, right? It's the shopper,
• 11:14
  Speaker 1: the budget shopper who goes to store A, says, hmm,
• 11:18
  Speaker 1: this seems a little high to me, walks across the
• 11:19
  Speaker 1: street to store B. Enough people do that. Store A
• 11:24
  Speaker 1: merchant says, hmm, nobody's in the store today. Maybe I've
• 11:27
  Speaker 1: got to lower my prices. So a lot of these
• 11:30
  Speaker 1: new technologies sort of, you know, do an end run
• 11:33
  Speaker 1: around some of the, you know, competition that keeps prices
• 11:38
  Speaker 1: in check in our economy.
• 11:40
  Speaker 2: So I'm not sure if I read this in the
• 11:43
  Speaker 2: book or elsewhere. I'm kind of fascinated by the concept
• 11:47
  Speaker 2: that you can pull up to a drive-thru at McDonald's
• 11:51
  Speaker 2: or Chick-fil-A or whatever your favorite fast food is. They
• 11:57
  Speaker 2: have an automatic license plate reader where they scan your plate.
• 12:02
  Speaker 2: They look up on the state database the zip code
• 12:06
  Speaker 2: the car is registered to. They can tell is that
• 12:09
  Speaker 2: a high-income zip code or a not-so-high-income zip code and
• 12:14
  Speaker 2: raise prices accordingly. Is the car I take going to
• 12:19
  Speaker 2: impact what I'm going to pay for McNuggets at Chick-fil-A
• 12:24
  Speaker 2: or McDonald's?
• 12:26
  Speaker 1: Yeah, so this is not an example that's in the book.
• 12:28
  Speaker 1: But what I can tell you is the data that
• 12:32
  Speaker 1: companies are collecting about you or planning to collect about
• 12:36
  Speaker 1: you or building the capabilities to collect about you includes
• 12:41
  Speaker 1: everything you just described and then some. There is a
• 12:45
  Speaker 1: patent that Walmart applied for to use imagery to tell
• 12:52
  Speaker 1: if your car suspension has changed from when you enter
• 12:55
  Speaker 1: the store and exit the store. The idea being that
• 12:59
  Speaker 1: if you leave the store with quite a bit of product,
• 13:01
  Speaker 1: your car will be heavier, for example. There is surveillance
• 13:06
  Speaker 1: that's being built in companies to figure out how old
• 13:10
  Speaker 1: your kids are and follow them throughout their developmental life course.
• 13:14
  Speaker 1: So they know when you're going to start swapping out
• 13:17
  Speaker 1: bottles for sippy cups and can charge you more for
• 13:20
  Speaker 1: sippy cups. There is all sorts of information that companies
• 13:24
  Speaker 1: can collect about your geographic location from where you log in.
• 13:29
  Speaker 1: Even in e-commerce, they don't need your license plate. They
• 13:32
  Speaker 1: can tell you know, from your IP address where you
• 13:35
  Speaker 1: log in from. And there was an example where Expedia
• 13:39
  Speaker 1: was charging people from higher income geographies more for the
• 13:43
  Speaker 1: exact same hotel room in Manhattan than people from lower
• 13:47
  Speaker 1: income geographies. So I think, you know, all of this
• 13:50
  Speaker 1: technology is, you know, these types of pricing technologies, the
• 13:55
  Speaker 1: engine that fuels them is your data. And as corporate
• 13:58
  Speaker 1: surveillance expands, the types of data that these companies collect
• 14:04
  Speaker 1: is really quite expansive and intrusive.
• 14:07
  Speaker 2: I don't remember if I heard you say this somewhere
• 14:10
  Speaker 2: or if I read it. There was something about if
• 14:14
  Speaker 2: you have tuna fish in your shopping cart and the
• 14:19
  Speaker 2: technology alerts, maybe it was Walmart, that you have that
• 14:23
  Speaker 2: and you grab mayonnaise, they're going to charge you more
• 14:26
  Speaker 2: for the mayo because you have tuna.
• 14:28
  Speaker 1: Yeah, so Walmart is very mad at me for talking
• 14:30
  Speaker 1: about this. And they wrote me an open letter on
• 14:34
  Speaker 1: Monday night about this. But, you know, they're trying to
• 14:41
  Speaker 1: position it as a he said, she said. But it's
• 14:43
  Speaker 1: a he said, he said, because my information is pulled
• 14:47
  Speaker 1: from their patent. They filed for a 2023 patent that
• 14:52
  Speaker 1: did exactly what you described, used Scan and Go technology.
• 14:57
  Speaker 1: connected to electronic shelf labels to track what you were
• 15:01
  Speaker 1: already buying, say tuna fish. And by the way, their
• 15:03
  Speaker 1: example in the patent was tuna fish and mayonnaise. So
• 15:07
  Speaker 1: you have tuna fish in your cart, the price would
• 15:09
  Speaker 1: change for mayonnaise. And this was the example that they
• 15:12
  Speaker 1: gave the United States Patent and Trademark Office. They have
• 15:16
  Speaker 1: since said they're not using this patent, even though they
• 15:20
  Speaker 1: built the technology and filed for the patent. And the
• 15:23
  Speaker 1: patent lasts through 2039 and And they have said that
• 15:27
  Speaker 1: they will not renew the patent in 2039. That doesn't
• 15:33
  Speaker 1: give me a huge amount of comfort, but that is
• 15:38
  Speaker 1: indeed their 2023 patent.
• 15:41
  Speaker 2: So the phrase that I've heard over and over again
• 15:43
  Speaker 2: is either surveillance capitalism on the corporate side or surveillance
• 15:48
  Speaker 2: pricing on the consumer side. Most of the examples in
• 15:53
  Speaker 2: the book are exploitive and negative. Is there any way
• 15:57
  Speaker 2: this can be used for the public good? Or is
• 15:59
  Speaker 2: this simply a way to squeeze every last penny out
• 16:03
  Speaker 2: of consumers that's possible?
• 16:06
  Speaker 1: Yeah, look, I mean, I do think overall, this is
• 16:08
  Speaker 1: pretty bad news for consumers. But I'll give you a
• 16:11
  Speaker 1: couple of examples of how you could use this technology
• 16:14
  Speaker 1: for good. So electronic shelf labels in grocery stores, they've
• 16:17
  Speaker 1: actually been in Europe for a long time, and they're
• 16:20
  Speaker 1: just newer in the United States. But one thing that
• 16:23
  Speaker 1: you can do with an electronic shelf label is very
• 16:25
  Speaker 1: quickly discount items on the shelf. And if you're concerned
• 16:29
  Speaker 1: about food waste, for example, you could quickly discount items
• 16:33
  Speaker 1: that are about to expire. So that would be one
• 16:35
  Speaker 1: way to use an electronic shelf label, both to reduce
• 16:38
  Speaker 1: food waste, but also to offer food at a deep
• 16:41
  Speaker 1: discount for someone who needed it, right, to feed their families.
• 16:47
  Speaker 1: So that's one example I'll give.
• 16:50
  Speaker 2: What was fascinating in the book, because there are a
• 16:54
  Speaker 2: lot of emails and a lot of litigation that has
• 16:56
  Speaker 2: found stuff, people say things. You would have thought the
• 16:59
  Speaker 2: Microsoft antitrust case would have taught people to never put
• 17:03
  Speaker 2: damning things in email. But when the CEO of Kroger
• 17:07
  Speaker 2: says a little bit of inflation is always good in
• 17:09
  Speaker 2: our business, I'm always kind of shocked at that. In
• 17:14
  Speaker 2: the RealPage Yieldstar case- What these guys admitted to was
• 17:19
  Speaker 2: effectively just back-slapping how much they're cranking up rents and
• 17:24
  Speaker 2: all but admitting to price fixing. What is it about
• 17:30
  Speaker 2: retailers that allows them to think that the consumers are
• 17:36
  Speaker 2: just going to keep taking it? Yeah.
• 17:38
  Speaker 1: I mean, this is one of the things that is
• 17:39
  Speaker 1: so frustrating about the conflict with Walmart is they say
• 17:45
  Speaker 1: one thing to consumers and in letters to people like me,
• 17:48
  Speaker 1: but they say another thing to their investors behind closed doors.
• 17:52
  Speaker 1: And they say a different thing entirely to the patent office.
• 17:54
  Speaker 1: And the book is filled with examples of what companies
• 17:57
  Speaker 1: tell their investors. I mean, one of the pricing tactics
• 18:04
  Speaker 1: that my organization exposed a couple of years ago was
• 18:09
  Speaker 1: Delta's partnership with Fetcher. Fetcher was this sort of, artificial
• 18:15
  Speaker 1: intelligence company out of Israel. They still exist. And Delta
• 18:20
  Speaker 1: had teamed up with Fetcher to hike prices on flights.
• 18:25
  Speaker 1: And we didn't do any particularly sophisticated investigative research to
• 18:30
  Speaker 1: find this out. It was all in the transcripts of
• 18:34
  Speaker 1: Delta's investor day calls. You know, their CEO, Ed Bastian,
• 18:38
  Speaker 1: couldn't shut up about how great Fetcher was and how
• 18:41
  Speaker 1: much fun they were having with Fetcher and how big
• 18:44
  Speaker 1: the revenue boost with Fetcher was. And they initially gave
• 18:48
  Speaker 1: this AI company 1% of their fares to muck around with.
• 18:52
  Speaker 1: And they like what they saw. So by the end
• 18:54
  Speaker 1: of the year, they were going to give it 20%
• 18:56
  Speaker 1: of their fares to muck around with. So it is
• 19:00
  Speaker 1: interesting what these companies will say to investors. I mean, look,
• 19:03
  Speaker 1: their incentives are different in those spaces. They're trying to
• 19:07
  Speaker 1: make sure that folks think that their business model is strong,
• 19:10
  Speaker 1: that their revenue projections are strong. They've got really good
• 19:13
  Speaker 1: ideas for the future. Maybe they're trying to juice the
• 19:16
  Speaker 1: share price because their compensation is tied to it. I
• 19:19
  Speaker 1: don't know. But they say a lot of things that
• 19:22
  Speaker 1: when consumers find out don't look so good.
• 19:26
  Speaker 2: Tell us about what Instacart was doing with their dynamic pricing.
• 19:31
  Speaker 2: It led to quite the backlash and ultimately they ended
• 19:36
  Speaker 2: up giving it up or did they?
• 19:39
  Speaker 1: Yeah, so my organization teamed up with Consumer Reports and
• 19:42
  Speaker 1: More Perfect Union. And we ran an experiment that exposed
• 19:45
  Speaker 1: a much bigger experiment that Instacart was running on millions
• 19:48
  Speaker 1: of Americans while they shopped for groceries. We got 400
• 19:51
  Speaker 1: volunteer secret shoppers. We had them fire up the Instacart app.
• 19:56
  Speaker 1: We had them set the same pickup location, a grocery
• 19:59
  Speaker 1: store in Ohio or Seattle or Washington, D.C. Then we
• 20:03
  Speaker 1: had them put the exact same 23 items in their cart,
• 20:06
  Speaker 1: you know, a dozen eggs, a pound of turkey, deli meat,
• 20:11
  Speaker 1: you know, a box of frosty flakes, things like that.
• 20:14
  Speaker 1: All the normal stuff you'd buy at the grocery store.
• 20:17
  Speaker 1: And then we said, look, just take a screenshot of
• 20:19
  Speaker 1: your cart so that we know how much they charged
• 20:22
  Speaker 1: you for each item in your cart. And then a
• 20:25
  Speaker 1: team of research assistants at Groundwork took all the screenshots,
• 20:29
  Speaker 1: entered them into an Excel spreadsheet, and, you know, just
• 20:35
  Speaker 1: crunched the numbers. And what we found is for almost 75%
• 20:39
  Speaker 1: of the items in the cart, Instacart was charging some
• 20:43
  Speaker 1: shoppers different amounts than other shoppers. And those differences were
• 20:47
  Speaker 1: as high as 23%. So you could be charged 23%
• 20:51
  Speaker 1: more than me for a dozen eggs at the same
• 20:54
  Speaker 1: Safeway grocery store in Washington, D.C. at the exact same time.
• 20:58
  Speaker 1: It was pretty stunning. We estimated that in some instances
• 21:01
  Speaker 1: this could cost $ 1, 200 a family. over the course of
• 21:05
  Speaker 1: a year, which is a month's rent in a lot
• 21:07
  Speaker 1: of major American cities.
• 21:08
  Speaker 2: So what ultimately happened when this was revealed?
• 21:12
  Speaker 1: Yeah, I mean, it was a pretty big story. It
• 21:15
  Speaker 1: was on the front page of the New York Times.
• 21:16
  Speaker 1: It was the cover of the New York Post. You know,
• 21:20
  Speaker 1: people were pretty ticked off. Consumer backlash was considerable. Maple Bear,
• 21:25
  Speaker 1: the publicly traded company, their stock plummeted. the Trump administration's
• 21:34
  Speaker 1: FTC announced a probe, the New York Attorney General announced
• 21:37
  Speaker 1: a probe. You know, there was a pretty swift backlash.
• 21:41
  Speaker 1: And about two weeks after the study was released on
• 21:44
  Speaker 1: December 22nd, 2025, Instacart put a blog post up on
• 21:48
  Speaker 1: its website saying that they would stop running these experiments
• 21:52
  Speaker 1: on consumers and that consumers who were shopping at the
• 21:56
  Speaker 1: same time from the same store would get the same price.
• 21:59
  Speaker 2: So here's some of the, I don't even want to
• 22:02
  Speaker 2: call it defense, but here's some of the responses have been, hey,
• 22:07
  Speaker 2: we're going to charge some people more, especially if they
• 22:11
  Speaker 2: come from a high income zip code and won't even notice.
• 22:15
  Speaker 2: And that allows us to charge less in the lower
• 22:19
  Speaker 2: income zip codes. Is that just spin or is there
• 22:22
  Speaker 2: any truth to it?
• 22:24
  Speaker 1: Yeah, I call this the corporate Robin Hood theory of
• 22:28
  Speaker 1: surveillance pricing. Steal from the rich to give to the poor. Look,
• 22:33
  Speaker 1: I think the truth is the goal of surveillance pricing
• 22:37
  Speaker 1: is to squeeze everyone as much as they can. And
• 22:40
  Speaker 1: so maybe if you don't have as much money, you'll
• 22:42
  Speaker 1: only get squeezed a little. And if you have more money,
• 22:44
  Speaker 1: you'll get squeezed more. But I think everyone will suffer.
• 22:47
  Speaker 1: The other thing I'll say is it's not always the
• 22:49
  Speaker 1: case that willingness to pay and income are the same thing.
• 22:52
  Speaker 1: Sometimes you have a high willingness to pay because you're desperate.
• 22:55
  Speaker 1: You've got to get that plane ticket to get to
• 22:57
  Speaker 1: a funeral or you're a mom like me and you've
• 22:59
  Speaker 1: got a sick kid and you'll probably pay $ 15 for
• 23:02
  Speaker 1: children's Tylenol. So I think as companies get better at
• 23:06
  Speaker 1: ascertaining our willingness to pay, I don't really think it
• 23:09
  Speaker 1: will matter what your income is. I think they will
• 23:12
  Speaker 1: be pretty good at taking what an economist might call
• 23:15
  Speaker 1: all of the consumer surplus.
• 23:17
  Speaker 2: So last question. I came of age when the internet
• 23:22
  Speaker 2: and e-tail was ramping up and the promise was it
• 23:27
  Speaker 2: was going to be a consumer wonderland. You would be
• 23:30
  Speaker 2: able to comparison shop. You can find prices everywhere and
• 23:36
  Speaker 2: consumers would have much better bargaining power. That doesn't seem
• 23:41
  Speaker 2: to be what happened. If anything, we know very little
• 23:44
  Speaker 2: about how prices are created, but the retailers seem to
• 23:49
  Speaker 2: know a whole lot about us and are charging us accordingly.
• 23:52
  Speaker 1: Is that fair?
• 23:53
  Speaker 2: Is that a fair assessment?
• 23:55
  Speaker 1: Yeah. I mean, I do think we were promised more transparency,
• 24:01
  Speaker 1: more power for consumers, and lots of benefits of e-commerce.
• 24:07
  Speaker 1: And I think what my book shows is in many cases,
• 24:11
  Speaker 1: you know, those promises haven't been met. And we've been
• 24:14
  Speaker 1: betrayed in that sense. And actually what these technologies are
• 24:17
  Speaker 1: doing is creating more opacity. They're more manipulative. They're more
• 24:22
  Speaker 1: coercive in some cases. So it's obviously really frustrating to see. But,
• 24:27
  Speaker 1: you know, everything old is new again. And now we
• 24:29
  Speaker 1: have agentic commerce coming onto the scene, AI shopping assistance.
• 24:34
  Speaker 1: And they're promising to, you know, help you navigate, you know,
• 24:40
  Speaker 1: the shopping hell that is e-commerce, right? Meta's Muse is
• 24:44
  Speaker 1: promising to help you cancel all those subscriptions you've been
• 24:47
  Speaker 1: trapped in, for example. So, you know, we're on the
• 24:50
  Speaker 1: precipice of the next kind of phase of this conversation
• 24:54
  Speaker 1: about what technology will promise. And of course, we have
• 24:58
  Speaker 1: to be on the lookout for peril as well. You know,
• 25:01
  Speaker 1: what will these AI shopping assistants do? be able to
• 25:04
  Speaker 1: do with all of the data they get from us?
• 25:06
  Speaker 1: What will happen when an AI agent has access to
• 25:09
  Speaker 1: your wallet? Will that be good or bad? You decide.
• 25:13
  Speaker 2: So to wrap up, prices are higher for a variety
• 25:17
  Speaker 2: of reasons, everything from war to tariffs to just yields
• 25:21
  Speaker 2: going up. But don't underestimate the impact of technology helping
• 25:27
  Speaker 2: retailers pull every last dollar they can out of your wallet.
• 25:32
  Speaker 2: I'm Barry Ritholtz. You're listening to Bloomberg's At The Money.