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You pay $75 more for your hotel room than the guest in an identical room next to yours. A friend is charged an extra $10 while online shopping for the same item. The difference in these prices isnt a result of simple supply-and-demand economics, but rather algorithms that analyze customers personal data in order to maximize what an individual will pay. Traditional pricing is based on market forces. Price discrimination is different, explains Justin Kloczko of the advocacy group Consumer Watchdog. Its based on you: Did you keep that tab open on your phone for some medication you are thinking of buying? Does the retailer know you prefer expedited shipping? Congrats, youre going to pay more than someone else who isnt considered to want the product as badly. These arent hypothetical scenarios: Retailers and platforms are doing this right now, a practice that critics call surveillance pricing. The issue was a focus of the U.S. Federal Trade Commission under former Chair Lina Khan. In the final days of the Biden administration, the FTC released a study showing that third-party companies use AI tools to help retailers boost revenue by as much as 5%, either through cost savings or by hiking prices for customers. But under President Donald Trumps new FTC chair, Andrew Ferguson, the agency seems unlikely to pursue the matter. Ferguson abruptly shut down the public comment period on surveillance pricing in January, and just last week Trump illegally fired the two remaining Democratic FTC commissioners, both of whom had championed studying the issue. With the federal government in retreat, California lawmakers are stepping up with a series of bills aimed at stopping companies from charging you based on who you are and what they know about you. The practice relies on intermediary companies hoovering up your personal information as well as data about your online and offline habits, and using AI to predict what price youll pay. Based on your private data, they may decide that because it’s your payday, you’d be likely to pay more, explains Victoria Noble, a staff attorney at the Electronic Frontier Foundation, which sees surveillance pricing as a problem attributable, in large part, to failures inor the absence ofprivacy legislation. Or when you need something the most, such as in an emergency, you would also likely pay more. California’s legislative package takes aim at different ways that AI is being used to set prices. One bill, advanced by Assemblymember Chris Ward and cosponsored by Consumer Watchdog, would block retailers from using a consumers personal information to adjust prices; another is aimed at algorithms that personalize prices based on explicit or perceived characteristics gathered from personal data. Yet another bill would prohibit algorithms from setting rental property prices and would allow tenants to sue landlords who use such technology. Its not just consumers who are being targeted. A bill from California Assembly Majority Leader Cecilia Aguiar-Curry addresses algorithmic price-fixing, which involves competitors using AI to collude to set higher prices. AI price-fixing is anti-competitive, restricts supply, and artificially inflates prices, she says, citing a case where, between 2022 and 2024, the price of frozen french fries rose by almost 50%, even though the underlying costs declined after manufacturers used a software program called PotatoTrac to share pricing data. A group of restaurant owners sued the manufacturers, alleging anti-competitive behavior. As the California Legislature, where Democrats control both houses, weighs these bills, it remains unclear whether Governor Gavin Newsom, who has occasionally vetoed AI-related measures (including a notable safety-related bill last year), would support such legislation. Also unclear: how watered-down the bills might be before they make it to his desk. But if passed, they could force companies operating in California to charge everyone equally, at least within the states borders. Now is the time to intervene on algorithmic pricing, say advocates. These technologies will only become more invasive, says Kloczko of Consumer Watchdog. AI is trying to hack our minds so it can predict our desires and fears in order to get us to buy more things for as much money as possible. Regulators are just starting to understand how widespread these practices are and how they impact the everyday lives of consumers. The FTC investigation started under Khans leadership found about 250 businesses across retail sectors use consumer information to set prices. Companies track behaviors from location to mouse movements, and even monitor what products you leave unpurchased in online shopping carts to decide what to charge you. Initial staff findings show that retailers frequently use peoples personal information to set targeted, tailored prices for goods and servicesfrom a person’s location and demographics, down to their mouse movements on a web page, Khan wrote in a statement last year. But now the FTC is pulling back on the issue. After Ferguson shut down the request for information and public comment periods for surveillance pricing and several other issues, Alvaro Bedoya (one of the two commissioners fired by Trump last week) criticized the decision, saying, Chairman Ferguson seems uninterested in the challenges that regular human beings face. Aguiar-Curry says federal inaction makes state action crucial, especially in California, the home of major tech companies: It’s more important than ever for California to lead on policies that make living more affordable, she said. Whether we have partners in Washington or not, protecting consumers and small businesses from illegal and unethical business practices is good policy and makes good sense.
Category:
E-Commerce
For two decades, Wayfair has thrived by offering customers an abundance of trendy, inexpensive furniturearound 30 million options, specifically. But as an e-commerce company, Wayfair’s employees didn’t actually touch or feel any of the pieces on the site. Our goal was to find suppliers of furniture and make them easily available online to our customers, Michael McCorry, director of curation strategy and operations, tells me. We only learned about the products later, through customer reviews and feedback. If a product got bad reviews, it would sink lower in the rankings. For the customer, shopping at Wayfair presented something of a risk. With such an enormous selection, they would very likely find a piece of furniture that perfectly fit their desired aesthetic. But unless it had many reviews, there was no telling whether it was well-made or would fall apart after a few weeks. Wayfair has heard this criticism loud and clear. Today, it unveils a new program called Verified that involves merchants painstakingly examining a selection of furniture on Wayfair’s site. The company has selected a small fraction50,000 pieces by the end of the yearthat will be verified for quality, durability, and value. The brand will highlight Verified furniture with a new purple check, and these pieces will surface higher in search results. This curation process is designed to make the shopping process easier for customers, but it also streamlines operations for the company. Wayfair expects that these verified pieces will become bestsellers. McCorry says that in the soft launch of the verified program, the 10,000 pieces that were verified already made up 15% of Wayfair’s total revenue. When 50,000 pieces are verified, it could make up a much more significant chunk of the company’s earnings. This new dynamic allows the company to ensure that the most popular products are in-stock and ready to ship quickly. But it could also make life more complicated for suppliers, who are likely to see an instant decrease in sales of non-verified items. [Photo: Wayfair] Inexpensive Furniture For Every Taste Wayfair emerged in the early days of the e-commerce revolution. While Amazon offered a very wide array of product categories, Wayfair wanted to be a destination exclusively for homewares. Wayfair doesn’t actually manufacture any products; instead, it sources furniture from factories around the world, styling the pieces in attractive ways, so that customers could easily find pieces that matched their aesthetic. (Many other retailers, including Pottery Barn and Crate and Barrel, also source products from third-party factories.) Merchants go through each item, categorizing pieces by stylelike mid-century modern or traditionalto help make it easier for customer to find what they are looking for. Our role was to source these products and make it easier to find the pieces that would go perfectly with their style, says McCorry. But over time, it became clear that customers were struggling to figure out what pieces were high quality and what pieces were not. This is also an issue of value, says Liza Lefkowski, VP, curation, brands, and stores. Customers want to know that the quality of the items corresponds to the price they’re paying for it. But in some cases, it was hard for them to tell. For decades, with the rise of fast fashion and fast furniture, consumers were looking for products that were affordable and trendy. But after bad experiences with poor quality, many customers are now looking for well-made, durable products at fair prices. [Photo: Wayfair] Verifying 700 Pieces of Furniture a Week McCorry says that part of the idea of the Verified program emerged when Wayfair began opening stores last year. For the first time, Wayfair employees were getting to see furniture in person, and recommending pieces to customers. We began to think we should do this with our online selection as well, he says. There was no way that Wayfair would be able to individually verify all 30 million pieces of furniture it sells. So, the company has developed a way to pluck out pieces to verify. Madeleine Gauthier, merchant manager, says the company’s team of merchants is at the frontline of this process. They’re familiar with the selection of products in their narrow category, such as outdoor furniture sets or bar stools. The goal is to verify several pieces of furniture across categories, styles, and price points. So, for instance, Wayfair will try to verify several brown leather sofas that cost around $1,200 price point, and several modern wooden vanities that cost around $300. Merchants send products to Wayfair’s Boston headquarters for testing. They choose these pieces based on whether they have good reviews and how popular they are. Then, they spend about half an hour on each item. We start with the unboxing experience, to make sure everything is packaged well, says Gauthier. Then we check that the assembly process is not unreasonably difficult. Next, they actually use the furniture, as a customer might. For an outdoor dining set, they will check if the pieces seem heavy enough that they wouldn’t blow away in a storm. They will sit in the chair and see whether it is the right height for eating a meal at the table. They will then compare the product to others they have tested. In the end, they will identify and promote the top products We want to have enough variety so that if you’re looking for something very specific, like a metal outdoor bar stool, you will be able to find a verified one, Gauthier says. Wayfair creates a little video of each product, with a merchant talking about its selling points. At this pace, the company can review about 700 products a week. Today, at the launch, there are 10,000 products that are verified. But the brand expects to get to a total of 50,000 over time. [Photo: Wayfair] Winners and Losers McCorry believes that many customers will gravitate towards the verified products. It makes the shopping process so much easier for them, which was the whole point, he says. They don’t need to go through all the reviews, because they know we have tested it and recommend it. Some suppliers are likely to experience an immediate windfall as a result of this program. Sales of their Wayfair-verified sofas or side tables are likely to spike. But other products are likely to go down in sales. Lefkowski admits that this has caused some concern among vendors. In response, Wayfair is trying to be as fair about the process as possible. We gave them a lot of warning about this program and we are very transparent about what we are looking for, she says. If their product didn’t pass the test, we give them feedback about what went wrong so they can correct it. And McCorry says that once Wayfair has verified all 50,000 products, its merchants will keep reassessing what is in the Verified program. If a supplier has an interesting new product that consumers seem to like, Wayfair might test and verify this product, displacing a similar verified product. Long term, our hope is that this encourages all suppliers to focus on quality and workmanship, says McCorry.
Category:
E-Commerce
Waymo, Alphabets autonomous vehicle company, plans to expand its ride-hailing service, Waymo One, to Washington, D.C. in 2026, the company announced Tuesday. While the nations capital currently prohibits fully autonomous operations, a Waymo spokesperson said the company will work closely with local policymakers over the coming year to help formalize necessary regulations. This marks the first time Waymo is bringing its commercial ride-hailing service to a city that experiences regular snowfall. Waymo vehicles dont yet operate in winter weather, though the company has conducted cold-weather testing in upstate New York, Michigan, and parts of California. As a result, the service would temporarily pause for public riders in D.C. during snow or icy conditionsat least until winter capabilities are added to the fleet. Waymo began as a stealth project at Google nearly 15 years ago, and has since grown into a leading player in self-driving technology. Co-led by Tekedra Mawakana and Dmitri Dolgov, the company reached full commercial deployment in San Francisco, Phoenix, and Los Angeles last year. Waymo One completed more than 4 million rides in 2024, clinching more than 200,000 paid passenger trips each week. (The company also topped Fast Companys list of the Worlds 50 Most Innovative Companies of 2025.) Waymo vehicles briefly appeared on D.C. streets last year as part of its cross-country testing program and returned this January. More vehiclesequipped with safety operators behind the wheelare set to arrive in the coming weeks. “Were excited to bring the comfort, consistency, and safety of Waymo One to Washingtonians, those who work and play in the city every day, and the millions of people from around the world who travel to the District every year,” Waymo co-CEO Tekedra Mawakana said in a prepared statement.
Category:
E-Commerce
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