AI-Driven Pricing Strategies

AI-enabled pricing utilizes artificial intelligence to determine prices based on data gathered from consumer interactions, such as browsing behavior and device information. This dynamic pricing strategy allows companies to adjust prices for the same product or service based on individual consumer data, potentially leading to different charges for different users.

For instance, Delta Air Lines has reported that 3% of its domestic fares are currently set using AI, with plans to increase this to 20% by the end of the year.

Technical Functionality

AI-driven pricing systems operate by analyzing substantial consumer data, including account details, purchase histories, and digital behavior tracked through web pixels. These pixels monitor user interactions like browsing patterns and video engagement. The system then predicts acceptable price points for each consumer, allowing for real-time price adjustments based on consumer behavior.

According to the Federal Trade Commission (FTC), such systems can influence pricing decisions by excluding certain customers from discounts based on assumed purchasing behavior, or altering prices for new buyers due to perceived inexperience.

Impact on the Housing Market

AI pricing algorithms are also being applied in the housing sector. Software like RealPage helps landlords set rental prices to maximize returns. However, concerns have been raised about market distortion. In response, New York has enacted a law prohibiting the use of such software for rent setting, citing antitrust violations and market manipulation.

Legal Considerations

The legality of surveillance pricing varies by jurisdiction. In the U.S., legislative measures are being introduced to regulate algorithmic pricing. The UK’s Digital Markets, Competition and Consumers Act, effective April 2025, allows for penalties on companies practicing unfair digital pricing tactics.

Consumers are advised to protect their privacy to mitigate data collection, although the effectiveness of such measures is limited due to advanced tracking techniques like device fingerprinting.