In a recent interview, Jonathan Kanter, the U.S. Assistant Attorney General for the U.S. Department of Justice (DOJ) Antitrust Division, shared his thoughts on the use of technology in setting and advertising prices.

Dynamic Pricing

One recent pricing trend involves dynamic pricing, where businesses can use technology to rapidly change prices based on real-time market conditions. Companies are announcing plans to use digital screens to display prices in-store, which would enable use of dynamic pricing. For example, Wendy’s recently announced that it will test dynamic pricing. It reassured customers that it would not use surge pricing to raise prices during busy periods, but instead emphasized that the technology would benefit customers by offering lower prices during slower times of day. Retail stores have also considered replacing price stickers with digital screens in order to maximize efficiency and save employee time. Of course, the switch to digital does not necessarily mean they intend to use dynamic pricing in the future, but the potential for this use has raised concerns among the public and regulators alike.

With these trends in mind, Kanter expressed concern about businesses’ ability to rapidly change prices, particularly if companies begin to set different prices for individual customers. He alleged that the ability to set prices on a personal customer level could lead to “greater extraction of monopoly power than probably ever seen in history.”

Use of AI in Setting Prices

Another trend involves businesses using artificial intelligence (AI) technology to suggest or determine prices. Kanter cautioned against use of these technologies to the extent they lead to price fixing. He clarified that using AI technology to fix prices carries the same consequences as colluding on prices with another human. Indeed, he noted using AI “should concern us more because it’s much easier to price-fix when you’re outsourcing it to an algorithm.”

Why It Matters

Companies are considering new ways to incorporate technological solutions into their business, and this includes technology that informs decisions to set prices and allows companies to easily change prices based on that information. The interview with Kanter, however, indicates that regulators are closely following these developments. Looking ahead, companies that consider implementing these technologies should ensure that their use complies with applicable state and federal law, including antitrust law.