Informing Consumers to Support a Fair and
Sustainable Digital Transition
Price personalization – the act of using a possible customer’s characteristics to tailor the seller’s approach, with the objective of raising the possibility of making a sale – has always been around. Such practice, which can be divided into price discrimination (which tailors the price of the product according to the customer’s willingness to pay for it) and price steering (which tailors the products shown to the customer according to what they are most likely to buy), has, however, reached a new level in the modern world, specifically relating to e-commerce.
This is mostly due to a rise in the amount of data available to collect and process, accompanied by the advanced technology to do so. In fact, almost every person in the world has at least one device that they use to connect to the Internet – and, consequently, that shares information such as their location, name, e-mail address, browser, and search history, etc. Although such information might not be breaking news, as the use of “cookies” – files that record users’ data, as well as their personal settings and interactions with a specific website – has been pretty much normalized, what the average consumer doesn’t know is that their data might be processed by companies to create a “customer profile”, used to identify them in seconds and, consequently, adjust what they are being shown.
These practices are generally legal, if the collection and processing of personal data is carried out according to the General Data Protection Regulation (GDPR), adopted by the European Union. According to this legislation, users must be informed that their data is being collected, to what extent and for what purpose, in order to express their consent to such activities – which is, for example, when websites ask the user to “accept” the cookies being used.
However, studies conclude that, although legal, this practice raises questions regarding the ethics involved. For example, according to a survey conducted in the US in 2016, 72% of the participants considered that price discrimination should be prohibited; while more than 80% thought that it was, at least, unfair. Therefore, it can be concluded that people generally do not feel comfortable buying on a website that states the practice of price personalization which makes websites only warn users that their personal information is being handled and retained by the website, but not that such information could be influencing the prices and ordering of products presented – which, in turn, causes legal problems regarding their informed consent.
This is the main motive for this investigation. It aims, through extensive research and analysis, to provide information and proof of these practices, so that the asymmetry of information between the seller and the consumer can be less prominent, while also raising the need for further regulation in protecting consumers and their fundamental rights.
An initial approach towards this concept was made with the project “Scraping the Web for Evidence of Price Personalization”, where some signs of price personalization were already found – which only further justifies more research.
In the year of 2023, professor Fabrizio Esposito conducted and coordenated research on data-driven commercial practices, focusing in particular on “Digital vulnerability and EU law”, “Hyper-involvement mechanisms and EU law” and “Personalised Pricing: Detection and Enforcetech”. He has also been involved in the project “Personalised pricing: Cambridge Handbook”, which aims to publish a handbook regarding “Algorithmic Price Personalisation and the Law” in 2024.