Everything is CALCULATED.
Start From Amazon’s ‘Price Testing’
In 2000, Amazon already had 23 million registered users.
In order to achieve as much profit as possible from these users, Amazon used cookies to track users’ online behavior under the name of ‘price testing’. Then different prices of the exact same DVD were showed to different customers: the price seen by new users was $22.74, while users who were identified by the algorithm as ‘having a stronger willingness to buy’ were charged for nearly 4 dollars higher.
Undoubtfully, Amazon increased the gross profit margin of sales thru its pricing algorithm.
Source: BBC News
The news that Amazon was charging different prices for the same products came out of a discussion group on the DVD Talk Forum website. Angry customers accused Amazon of “sneaky” and “unethical”, CEO Bezos publicly apologized and promised a refund.
On October 1st of this year, the “big data pricing algorithm” was banned in China. It turns out that Amazon already played with prices 20 years ago.
In the digital age, convenience and danger coexist. The constant debate has only made ‘big data’ a hotter topic. Whether it is “over-interpreted” or not, there are some problems we have to think about.
Why Big Data Set Us Up?
This phenomenon of “charging different prices for the same products” is called “price discrimination” in economics.
Such commercial operation goes way back. Everyone knows that jade trade industry is extremely complicated, and the jade merchants are good at playing with prices. For the same pair of jade bracelets, the offer for the layman and the insider could be several times different.
Although Amazon’s pricing algorithm was criticized at the beginning, in recent years it has been followed by Chinese e-commerce companies.
E-commerce companies, based on user big data, coupled with AI technologies, offer different prices and discounts for different users in an attempt to maximize benefits.
Ctrip, Didi, JD.com, Fliggy, Tao Piao Piao, and Meituan have all been involved in the “big data” storm. More and more people are worried about the negative effects of big data.
Of course, there are also people who believe big data is innocent, thinking it’s just a tool. Pricing algorithm is the marketing strategy of e-commerce companies. Tools are not good or bad, it depends on how people use them.
Big Data Know Your secrets?
One day in 2012, a male customer angrily came to Target and asked the manager for an explanation because his 16-year-old daughter received a coupon for maternity clothing. But then, the father found out that his daughter was actually pregnant.
Target builds a huge database by collecting the consumption records of each customer.
Data analysts of Target have developed many prediction models, and pregnancy-prediction model is one of them. By analyzing the girl’s purchase records, which included fragrance free wipes and magnesium supplements, it is predicted that she might be pregnant, and she needed to buy maternity clothes.
Who would have thought that big data knows a girl better than her father?
In the eyes of the algorithm, everyone’s privacy is invisible. How terrible it could be once privacy is misused? Sometimes, your “face” no longer belongs to you.
In September 2019, the popular AI face-changing software ZAO was pulled down from app stores because of its scandal. According to the ZAO user agreement, the company had the right of use and modification of user portraits for free. The APP can also sell the information to a third party without permission.
The Internet industry’s endless collection and abuse of user privacy has become a common problem. I am afraid we will all be exposed to technology like “transparent people” without secrets.