Are we getting the best price when we shop around online or do we merely think we are?
Big data is the next big thing that we don’t yet fully understand. It’s like the term ‘digital’ was back in the 90’s. We knew it was important, we knew it was powerful but we hadn’t really understood its full potential. As some companies scramble to understand what Big Data means and what they can do with it, smart retail conglomerates are already exploiting it to their advantage… The’re going to charge you more for that next tablet computer or office chair you’re thinking of buying. They’ve turned the free and open internet to work for them and against you.
Sat on a train writing this, I’m disconnected from the world, I’m not communicating with anyone by the real people around me. They’re listening to what I have to say and to some extent, reading my body language. They are using that information to decide if they like me, if I’m telling the truth and to decide if I’m generally a stand up guy. If we grew into life long friends they would use this and millions of other points of information about me, to tailor presents, conversations, and behaviour to my preferences. This body language is the meta data of face to face interaction. Very similar to the meta of the internet – all the information about information. This Guardian website about the NSA and data collection explains it really well.
I’m comfortable with giving away all this information about myself in a face to face situation (many aren’t) but I’m not so comfortable with corporations collecting great swathes of data about me from the internet. I mostly I’m uneasy because I’m not really sure what data they are collecting, or most importantly, how they intend to exploit it.
As soon as I get to my destination in London, I’ll be in one of the most connected cities in the World. My phone and tablet will instantly connect to networks and start giving away data about me (although mostly anonymous at first). I’ll open my laptop, connect to a wi-fi hotspot and start browsing the web or download my latest Kindle book. In all these actions I’m not just letting Amazon know what book I’m buying but I’m also letting the wi-fi operator and the coffee shop chain I’m sat in. They can all see when I do stuff, where I go and how long I spend there. They can use this to start to build up a picture of who I am, and more scarily, what I think.
Identifying an Individual
Research suggests (here’s a WSJ article on 33 bits of entropy) that it takes only 33 bits of disparate information about an individual to be able to identify that single person out of the nearly 7 billion in the World. Thats a tiny amount of data really, in order to know exactly who you are.
A simple example of how this collected data is already used is ad remarketing. Google are very successful at it. You visit a site selling coffee one day, then you start to see ads for that coffee company (and others) pop up all over the web on completely unrelated websites for bike parts, clothing stores and software companies. This is because that coffee company had a few tools installed from Google that lets them know what you did on their site and then lets their ads pop up on other sites because they know you might still be interested in that coffee after all.
This is all completely anonymous at this point. They likely don’t know who you are specifically. I mean in terms of a name, email address or other specifically identifying information. But what if they could connect that data to who you are as well as what you’ve been doing? Could they then use that to begin to connect up more and more disparate data sets all about you?
More and more data
So far I’ve just mentioned technology that is in use right now, but what about new technology that hasn’t been fully realised yet? Think in store cameras, web cams, lasers that can detect heart rate from 20 paces and super sensitive microphones that can understand your conversations from 50 meters away. Just imagine a microphone picking up a child pestering its parents for that latest toy. When you get to the toy isle, the automated price displays have already inflated the price by 10%.
Paying the maximum you are willing to all the time
Using just some of the new technology, a whole bunch of technology that already exists and a little bit of clever marketing and engineering, the web could start to work against consumers. Instead of the open web we have right now that empowers us to find any product we want for the absolute best price, we end up with a web that tells on you behind your back.
Retailers will be able to collect that meta data and use it to tailor prices to you specifically, right now, right here, based on what you are thinking. Staples are already trialing variable pricing in the US that simply uses location data to determine price variation. But it’s possible to be more intelligent than that, in using other data points like the proximity of rival stores to you, the time of the year, time of day, the speed of your browsing, what sites you’ve been searching, what you’ve purchased in the past and even what your job title is.
Problems with this
There a number of issues with the extremes of this becoming reality, not least data protection and anti price fixing laws but its already going this way. The problem for consumers is, its hard to know when this is happening. Its hard to know when you’re being had. Its like an even more complicated version of the supermarkets convoluted multi buy promotions.
The future of the truly free and open internet is looking more and more expensive to me unless you are really really savvy to these things. You’ll find yourself increasingly paying the most you are willing to, and never a penny less, never a deal in sight.
And what if retailers banded together, connected their systems? I know price fixing is illegal but just think how easy it would be and how hard it would be to prove. As long as all companies had the same algorithms on their software then they could charge us more because they wouldn’t be competing on price but rather on who can push your buy buttons at just the right time.
Still after a deal everytime you go to make a new purchase? You better get in there quick, while you’re still in control of the price you’re paying.
(Post originally written for bbdstudioworks.com here http://bbdstudioworks.com/blog/always-paying-the-max-no-more-open-free-internet/)