Phone nearly empty? Uber’s fare might be higher
If you buy something online, the webshop can adjust the price based on your data. Kimia Heidary investigated the phenomenon of online price discrimination. ‘It’s not necessarily unfair. Different prices for different people has been around for years.’
'Are you an animal lover?'
'Are you into luxury goods?'
'Are you pregnant?'
‘Webshops can use this kind of information to create a profile about you as a (potential) customer and then determine what price you’re willing to pay for a product,’ explains Kimia Heidary, who spent four years investigating online price discrimination. High-profile examples of online price discrimination include ride-hailing app Uber allegedly charging a higher fare when a phone’s battery level is low and tutoring agency the Princeton Review charging families with an Asian background a higher price for their children's online tutoring.
Digital trail
To offer consumers personalised pricing, companies use a similar technique behind personalised ads. Heidary spoke to several e-commerce companies: ‘The moment you create an account or agree to a company’s privacy policy, you usually give up certain data. Not only that, your search and purchase history often leaves a digital trail on the internet.' Webshops can use that information to their advantage. ‘If you’re someone who looks at prices on “Google Shopping”, a tool to quickly and easily compare webshop prices, then you might be a bargain hunter and therefore sensitive to discounts.’
Student discount
Price differences may seem unfair to consumers. However, Heidary says the term ‘price discrimination’ gives a distorted picture because it gives the impression that companies apply price differences in a way that is prohibited, for example on the basis of race. ‘But this is an economic concept and in economics, “discrimination” means differentiation.’
'Having different prices is not necessarily unfair. Different prices for different people has been around for years offline, like the student discount at the hairdresser or museums.' The idea is that if some people pay more, then people who are less well off, like students, can pay less.
Lack of transparency
So, why does the phenomenon of online price discrimination get our back up? Heidary: ‘The problem is a lack of transparency. In the normal, ‘offline’, world, it’s clear that certain consumers pay more for exactly the same product or service and others pay less. For instance, there could be a sign on a shop counter displaying the different prices. You can then immediately ask yourself if you think that price difference is fair.' But it's different online, says Heidary: ‘You're often not aware of it, because you’ve no idea what other consumers are paying; and you often don't know whether the price is personalised and, if so, what information has determined your price.’
No irrelevant information
That said, Heidary is not convinced that more transparency is the solution: 'Consumers shouldn’t be swamped with irrelevant information.’ Heidary believes a balance needs to be struck between helping consumers and allowing them to make autonomous choices. 'Research has been done on the extent to which you can guide consumers to make better choices when it comes to sustainability, for example. This showed that you shouldn't be too patronising or limit consumer autonomy very much; consumers should only be given relevant information.' The question of what information is relevant when it comes to online pricing has yet to be addressed. Heidary: ‘When I started my research in 2020, very little was known about online price discrimination and even now the topic is not yet on the political agenda. I hope that will change.’
The defence ceremony of Heidary’s dissertation 'An Empirical Legal Investigation of Online Price Discrimination' took place on 19 February 2025 in the Academy Building.
Text: Helena Lysaght
Image: Getty Images on Unsplash+