Market watchdog calls for transparency on AI in price setting

The Dutch consumer markets authority ACM has called for more transparency on the role of AI in setting ticket prices after an investigation found wide discrepancies in the amounts charged for airline tickets.

The ACM said some airline seats had 35 different prices, while one-third of tickets cost 40% more than the average price, but there was no easy way for passengers to find the cheapest fare.

ACM chairman Martijn Snoep said the investigation into airline tickets was relevant because “similar techniques are being applied in other sectors”. Online retailers, concert ticket sites and even petrol stations are also using AI to set prices.

Commercial companies are using AI to drive dynamic pricing, based on supply and demand and competitors’ rates, but customers are unable to see how the prices are set.

Sometimes two people looking at the same product at the same time can be charged different prices, the ACM said. The impact of AI also means consumers spend longer searching for the best deal.

“We expect that AI and the availability of data means companies will increasingly use computer-aided prices, including personalised prices,” Snoep said.

The ACM has called on companies to be more open about how they set their prices and explain what factors influence the algorithms.

“Transparency is necessary so we can have a public debate about the desirability and the consequences of this development and how we want to proceed, keeping an eye on the way markets function and preventing people’s vulnerabilities being abused.”