Will algorithms increase your grocery bill?

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0:38They have enough information they can figure out exactly how much you would be willing to pay before you walk away. Welcome to The Interface, the show that decodes how tech is rewiring your week and your world. I'm Karen Howe, and I'm back. And we missed you so much, Karen. I'm Thomas Germain. And I'm Nicky Wolfe. Today on The Interface, we'll be talking about whether algorithms are going to jack up the price of your grocery bills. And how if even astronauts have problems with Microsoft Outlook, why is it still so popular? And is the new tech trend less tech?

1:17Okay, so let's jump in here. I want to talk to you guys about Walmart. Walmart, one of the biggest retailers in the world. If you've never been to one, it's a paradise. You can get anything you want. You can get anything you want. Yeah. You can buy new family members at Walmart. It's a huge store, whatever you need. We're starting with a little bit of old news, but the implications are fresh. So in March, Walmart announced that it was rolling out digital price tags to all of its stores. They're already in 2 ,300 Walmart stores instead of like a little sticker, instead of a piece of paper. This is how much something costs.

1:53They have a screen that can be adjusted. this is coming to all Walmarts in the near future. And what Walmart says and what, you know, the National Retail Federation says is this is great because it's going to cut down on work for Walmart employees and they won't have to run around the store and change all these little pieces of paper that get thrown away. It's better than the environment. Sounds great, right? The concern here is something that maybe you've heard about, which is called dynamic pricing or personalized pricing or sometimes even surveillance pricing. And the idea is when you can just change the price on a little screen in a physical store or online that we can charge different people, different prices for the exact same thing based on your data and the data that companies are collecting about every single consumer.

2:44And it'll create a big power imbalance between you and the companies where they can squeeze a little bit more money out of you down to the last penny because they have enough information they can figure out exactly how much you would be willing to pay before you walk away. We know it's already happening in a lot of different places across the economy. And it's only getting worse. And the only question is how far this is going to go. We should talk about the times in which you will have already experienced dynamic prices. So I think we talked about before about how when you book a flight, if you are looking for flights, then you'd go back and maybe the price of the flight is slightly different.

3:24Now, it's one of those things that's really hard to prove. And you kind of, sometimes when it happens to me or when I think it's happening to me, it's sort of like being gaslit, right? It's like, no, this is the price. And you're like, would it have been the price if I hadn't already checked it? If the company wasn't aware that I wanted this thing, would I be getting a different price for it? Am I being the price? 100%. I have tried multiple times to buy flights on VPN in different locations. And I've tried that to see if they're using geolocation to price my flights higher. But to your point, Nikki, I can never quite figure it out because the patterns are not obvious.

4:05I tend to VPN myself into Iceland and buy flights. I don't know why. It's almost become a superstition for me. like you do the you must appease the gods of the dynamic pricing in order to get the best and there's no there's no evidence that anything like that works or at least i've never proved it to myself there are all these techniques that people use to try and get around this because you've heard this before right that the airlines they have all these special you know ways that they're figuring out how to get a little bit more money out of you people will like open a browser like in a private window and or there for a while there was something and goes like, oh, you got to buy your flights on Tuesdays.

4:41The flights are cheapest on Tuesdays. There's no evidence that any of this stuff works. I wouldn't rely on it. Like that's not advice that we're giving you. The point is that this is coming to your weekly grocery shop. This is coming to when you need to buy milk, when you need to buy cabbages. Cabbages. What's in your weekly shop? People buy cabbages. That's such a good one. People buy cabbages. Yeah, just milk and cabbage every week. That's all right. Milk and cabbage, you know, the traditional English breakfast. But this is, it's not just flights, right? This grocery example is real. So there was a study done by Consumer Reports with a couple of other groups.

5:20I used to work at Consumer Reports years ago at the beginning of my career, looking at a grocery delivery service called Instacart, where they had a bunch of shoppers volunteer the data they were getting. And they found that people were paying as much as 23 % different prices for the exact same groceries. But there's all kinds of other examples we can look at. Uber, for example, right? Every time you look at the Uber, yeah, surge pricing, right? You know, when everyone's leaving the concert at the same time or your flight lands at the airport and everyone's going, the price spikes. Years ago, there was a story that Uber was charging people more money when the battery on their phone was lower, right?

6:04It was like, oh, you're a little more desperate. We can charge you a little more is the theory. Oh, that's horrible. They got in a lot of trouble. Apparently this practice is over. The thing that gets me about this is like, I spent years and years writing about privacy and it's like really the harms are kind of, you know, obscure and it like might hurt you in the future in some particular way. And people, it's always like, oh, I got nothing to hide. Who cares about this? Here's an example of why your privacy matters. This is all about informational imbalance. The companies know more about you than you know about the transaction.

6:37And it's not just you, they know more about all of us. And it gives them a huge power imbalance. The humble price tag, the New York Times did a story about this, was actually a very powerful tool for consumers and shoppers, right? Because we knew what something cost. The idea here, the ultimate goal, is that that's going to go away. And as you careen around the internet, your data is going with you. They can compare you to lots of other people. And they can set a special price that's just for you. So because in the United States, there are basically no laws about privacy, not at the federal level, at least, this kind of thing is allowed.

7:16They can collect almost whatever kind of information they want about you. Yeah. I think one of the things that people don't necessarily understand when they realize that dynamic pricing is happening is they think that it's people who can pay more that are charged more. And that is also the general line that I think a lot of companies use, where they're like, oh, we're actually lowering the price for consumers that might not be able to pay as much. But actually, study after study has shown that sometimes the opposite happens. So you were talking, Tom, about the Uber case. There was this really famous study in 2020, where researchers at Washington University were looking at over 100 million rides in Chicago, and they found that Uber, Lyft, other ride-hailing algorithms, we're actually charging higher prices for trips going to neighborhoods with younger residents and also poorer neighborhoods and larger non-white populations.

8:16So this is like algorithmic discrimination at its finest. Now, the defense of this, because there's another side of this argument. And like Karen said, part of the argument is like, oh, we're going to be able to charge people who can afford to pay more. Like they will pay a higher price and that'll subsidize people who can only afford to pay less. There's another argument that you hear that like, no, what this is really about is coupons, that we will lower the price. That was the Federal Trade Commission, the FTC in the United States, which regulates commerce, did a big investigation of this and ultimately came up a little dry because most of this is about coupons, at least the way that it's laid out now, where some people will get a discount and others will be charged the maximum price.

9:05So you can frame this in a way that sounds good. You know, rich people paying more, some people getting coupons. But what this is really about and why else would they be doing it is to figure out the most that each individual person is willing to pay and charge them that amount. Right. And we're sort of talking, we've been talking through a lot of examples where purchases are being digitally mediated, right? Like online shopping, Uber, Instacart. But the reason why the Walmart announcement is such a big deal is because it also indicates that it could be coming in stores, right, Tom? Yeah, that's exactly right.

9:45So it's easy to do on the internet because I'm looking at my phone, you're looking at your phone. They can show us two different things. How do you do this in stores? Well, not that hard if instead of a price tag, you have a little screen that tells you what everything costs. Now, the most extreme version of this, the technology exists. We know about it. If you go to like retail conferences, there's tech companies there that are advertising. This is so cool. We'll let you do it. They can do things, for example, like use facial recognition cameras to be like, oh, that guy was here last week. And we have this chart like tied to his loyalty card.

10:20We identified him with his face. We know he'll pay 20 cents more for bananas. So let's jack up the price as he approaches the banana stand. That's the most extreme version, right? The slightly less extreme version is it doesn't have to be necessarily a different price for you specifically. But when it's super easy to change the prices dynamically, they go, oh, for whatever reason, more people are buying cookie dough today. And we anticipate based on our mountain of data that even more people will be buying it in the next two hours. So jack up the cookie dough prices. So that's the concern about Walmart.

10:55But we should give Walmart a chance to defend itself here. We reached out to them. Here's the quote that they gave us. They said, it's interesting to hear those concerns. It is interesting. I agree. It's kind of a nice compliment, right? But if you talk to people who shop in our stores every week, we think they will have a different view. Those labels are just a modern tool to help our associates do their jobs better. But the price you see is the same for everyone in any given store. They see the work we do every day to keep things affordable. They also sent us a link to some blogs that you can go find from the National Retail Federation.

11:30There's all kinds of people all over the internet, especially those who work for industry trade groups who will tell you why this is so great. That essentially, ultimately, this will lower the prices for most people. But I have to ask, why would you do this if you were Walmart, if this is going to make prices lower for your customers? I mean, like, we're running a business here, right? Of course, you're going to try and make the most money as possible. The hope is that this will make the economy more efficient, and then everything will be great. But if I was a giant corporation, that isn't what I would want to do.

12:06So I guess it comes down to where you're going to put your trust. The concerns that we're bringing up are not pure speculation, right? the Consumer Reports investigation that you were referencing earlier, Tom, it also found that for Instacart, Instacart had actually filed patents that would have enabled constant in-store price testing, price changes, the exact type of system that we're actually talking about. And it was predicated on these digital price tags. So it's not something that, you know, we're just sort of speculating here could happen simply because the capabilities exist. It is something that companies have actively discussed to the point of even filing a patent for it.

12:52Yeah. And we're living in the middle of a almost unprecedented cost of living crisis as well. It's the top political issue. Right now, people are struggling. You know, we're talking about these corporations using personal data to crank up things that are essential to the basic quality of life. Like with that consumer report study, they found that families buying exactly the same price of basket of goods, you know, shopping for exactly the same items, it could still cost them$1 ,200 more in a year to purchase those groceries that another family over that the algorithm priced differently. Yeah, that's a huge amount of money.

13:35If consumers don't like this, there's pretty widespread agreement about this issue. What are we going to do about it? Well, legislators are trying. There's some proposals. In New York State, there is a bill that would ban algorithmically determined prices and it would force companies to disclose if they're doing any automated price adjustments based on consumer data. I think the way that this bill is phrased is so broad that it would be hard to get it through because like you ban all algorithms that are used to set prices. You know, algorithms in general are not evil. So I think it might need to be phrased a little differently, a little more specifically in order to address this problem.

14:16And before the bill passes, because bills do take a little bit of time to pass, it's worth noting that the Consumer Reports investigation actually led Instacart to suspend all of their AI-driven price adjustments. So consumer outrage also works. So here's something that you can do for us, which is I'm calling the Great Interface Banana Pricing Study. If you go to a store and it has dynamic pricing, it has like an electronic tag, take a little picture of the tag, tell us where this store is, which store it is, and send it to theinterface at bbc.com and hopefully we can gather enough data to figure out if something shady is going on.

15:01We're going to take down Big Banana once and for all. Big Banana is a real thing. You know, the fruit company is scary. I don't know if that's a tech story. Big Banana is really scary. Yeah, yeah. .

15:44at bbc.com slash unlimited.

15:49All right, so I saw something this week that I just had to talk to you guys about. We're going from Walmart into outer space. America is going back to the moon. And as part of this mission, they launched the Artemis space probe, which has four astronauts on board. They're going to do a long pass around the moon. And at some point, there was a call, Houston, we have a problem. and it's a problem that I think probably a lot of our listeners will have come across. So you are like an astronaut in this. If you have ever had a problem that has led you to go, God damn it, Microsoft Outlook is broken again.

16:26That happened onboard the Artemis space probe. Microsoft Outlook broke. They have these Microsoft Surface tablets, which is their personal computing devices. So this is not, to be clear, this is not endangering the mission. That mission-critical email. It's not mission-critical email, but they had to call mission control and have somebody, have an IT guy take remote control of the thing to fix their Outlook. You know, using Outlook does feel like being an astronaut. You're in this strange alien world. Nothing makes sense. It's interesting to me that Microsoft, especially Outlook, is such a widespread butt of a lot of jokes, right?

17:09the reaction online when it turned out that these astronauts were having like some outlet problems. Let's just say that people weren't surprised. The reaction was, oh, this is a near universal experience that we have all had. It is of all the tech companies, the one that I hear like the most consistent criticism about like, not like the company's business practices, but about the experience of using the products. I know so many people that hate Microsoft. Do you guys use Microsoft Outlook? I have to use my, the BBC runs on the Microsoft Office Suite. We have Outlook accounts. I use it every single day.

17:48That will be the distinction with a lot of people listening, I think, is if you work for a big corporation, it is likely that you will have Microsoft Outlook. And I think it's worth diving into why Microsoft products have so cornered the market in big corporate contracts for being used for work when, generally speaking, they are much less popular when people are choosing for their own individual use. And the reason so many companies are using it, it isn't necessarily because the products function better. There are a lot of very practical reasons. For one, security, right? Microsoft's whole thing is working with other businesses who need large contracts, and there's all these like compliance issues that Microsoft has set up to follow.

18:36They're in a position to just make it really smooth for IT departments and certain things like, you know, Excel are just the industry standard. But there's another aspect of it here, which is that they are using algorithms and other ways of just extracting more value out of the consumer. And they know that you're locked in. So they don't really have a huge incentive anymore to make a really great experience. And the problem is if your company that you work for has negotiated a contract with Microsoft for the entire workplace, where is your consumer choice? You don't really have a decision on whether you can use Outlook because they have these massive B2B contracts.

19:25Yeah, these companies in a lot of ways don't really compete with each other. There'll be like little corners of the market where tech companies compete. Like if we look at like cloud computing, Amazon Web Services is number one. Google has cloud computing software or services. Microsoft has Azure. But if we look at like broadly, Amazon is a retail company for the most part that isn't competing with Microsoft. Microsoft is an enterprise software company. Google competes with them a little, but it's like not even close. Apple makes, you know, phones and hardware. Every company is like in a different corner of the market and people are using them, I think not necessarily because they love them.

20:09Like, do you use Google search because you love it the most? Like, have you done comparison shopping and looked at the others and decided Google is the best or is it just, you know, is it a monopoly? It is, I'll give you the answer. It is a monopoly. The courts have ruled that Google uses illegal business practices to make its competitors worse and shut out the competition. It's an interesting, you know, there are other industries where there's competition and people use the one that they like. I mean, we look at AI, like people who are into AI use the tool that they prefer. There's been a lot of like switch over to Claude, which is made by a company called Anthropic, away from ChatGPT, because there's real competition in the market.

20:45There's products that are fundamentally almost identical. And there's like this little variation where they have to make it a little bit better. Microsoft doesn't really have to do that, at least in terms of the user experience. They need to be better at making like enterprise customers happy. But in terms of like whether, you know, schmucks like me who are stuck using Outlook every day have to enjoy it, that's not necessarily, it just has to be good enough that I won't start a riot. But I got to tell you, we are close. We're pretty close. If it crashes one more time. I have to say, I mean, I am not a big defender of Microsoft as a corporation.

21:28But I will say, I will say, Microsoft Word. You use Microsoft Word to write, really? No, no, no. So originally, I usually use Google Docs. Someone turn Karen's camera off. I can't hear this. I usually use Google Docs to write, if I'm writing short form. And I used Scrivener to write my book, which is like this software that helps you organize things that are very long form. But at some point, you have to export out of Scrivener to start, you know, moving things around more easily. Microsoft Word had this incredible feature that saved my life, which was the ability to look to take two documents and compare them and show the difference in track changes.

22:15that was actually life-changing. So I just, you know, I just wanted to put in a little love letter for that specific future of Microsoft Word. I mean, it's a very strange situation where this company that started out, and Microsoft Word for the longest time absolutely was the corner of the market, was the only game in town. They blew all their competition out of the water. It was the Google of word processing for an unbelievably long time. In the very recent past, Microsoft was the most valuable company on earth. Like within the past couple of years, they're always like in the number one, two or three spot.

22:52This is a big company. I mean, it's still a huge consumer company. There are millions and millions and millions of people who are using, probably using a Microsoft product as they listen to this, right? But when we look at like, why are regular people buying Microsoft products or buying computers that use Microsoft? I think there's two reasons, right? One is if you're a gamer. Gamers love Microsoft or they love Windows because a lot of games will not work on other operating systems. It's just like a compatibility issue. Yeah, particularly Mac. There's a whole load of games that just simply aren't.

23:27Will not work. The other reason that a lot of people use Windows and Microsoft products is because the computers can be cheaper. You can get a much cheaper Microsoft laptop than an Apple laptop. until last month when Apple rolled out its new laptop. It's called the MacBook Neo, and it cost$599. And this is a major change in the history of computing for a number of reasons. People have always wanted a cheap MacBook. Apple has always refused to make one. Now, from all, you know, we don't review products, but from the people who do, the sentiment seems to be everyone thinks these things are great, especially for the money.

24:12It's like a no-brainer that this is the best cheap laptop on the market. I think this is going to cause a sea change where over the next five to 10 years, people who have less money that would have been on a PC who are making a purely price-driven decision are going to switch over to Mac. And this will be in large part the end of an era for Microsoft unless, you know, the Lenovo's Novos and HPs and acers of the world step up their game significantly. But that is hard to imagine, given Apple's success at making, you know, devices that people fall in love with. So this could be the beginning of the end because of the way, you know, that the PC manufacturers and Microsoft have played their hand here.

25:01And I think that Microsoft could lose this part of the market altogether and still be incredibly successful because they make all their money from other businesses. Right. Google tried to wage this war against Microsoft with the Chromebook and Microsoft managed to hold them off and maintain their position as kind of, if you buy any laptop that isn't a Chromebook and isn't an Apple, we'll be running Windows. We'll come with Windows. But we've reached out to Microsoft for some comment and they haven't got back to us at this point at time of recording, but we'll put their response in the show notes.

25:39So I feel like the first two stories that we talked about today really relate to what I wanted to talk with you guys about, which is how to disentangle yourself from digital tech and try to find the sweet spot where you're not just completely consumed by the algorithm, completely consumed by the vortex of online information, but in fact, you figure out exactly for yourself where you want to draw the line for how much digital technology you really want in your life. And this is the rise of neoludism. There are many names for it. There's this name, Neutro, which is the portmanteau of new and retro, people reverting back to older 80s, 90s technologies.