
Uber Is Using AI to Charge People as Much as Possible for a Ride - aceperry
https://motherboard.vice.com/en_us/article/uber-is-using-ai-to-charge-people-as-much-as-possible-for-a-ride
======
minimaxir
Granted, "charging people as much as possible" is a basic tenet of
microeconomics (another related one being pricing things according to the
customer's willingness-to-pay). It's not even AI, just a first-derivative
maximization.

Profit maximization is not inherently _evil_ unless it's monopolistic. Which
in the case of ride sharing, it isn't.

~~~
bryanlarsen
"not inherently evil"

The concept of the consumer surplus is the reason why capitalism is preferred
over other economic systems such as feudalism or communism.

One price for all is a cornerstone of our social contract. Discarding it will
place that contract in danger.

If all the profit in a trade goes to the robber barons, such trades will be
rightly seen as unfair and calls for the revolution will become loud.

~~~
bryanlarsen
Previous attempts at price discrimination have been transparent: senior's
discounts, time or capacity based pricing, et cetera.

This is considerably different, being opaque. Once this gets out, everybody
taking an Uber will have that nagging feeling in the back of their head, "was
I ripped off this time?" And it'll make them think twice the next time they go
to order one.

~~~
thwarted
If someone gets the service they wanted/needed at a price they were willing to
and agreed to pay, they weren't ripped off.

~~~
sushid
Really? So you wouldn't think it was unfair that they charged you more because
they guessed that your workplace or your rent price based on your trips? Or
because your phone battery was almost dead in a location you're not normally
at?

Think about it this way: You would probably pay a hospital your net worth if
you had a child and he/she was seriously hurt and taken to a hospital. B would
you think leveraging this information to take more money from you be "fair?"

~~~
thwarted
No, I wouldn't think it was unfair if they presented a price that was more
because of <insert some reason here>, and then I decided not to pay it because
I didn't think their service was was worth that price.

If you don't like what Uber is charging you, then don't take Uber. You can
consider whatever constraints you like when determining the price you're
willing to pay: convenience, time, cost, cleanliness, location, whathaveyou.
Maybe you value your time less than the cost of an Uber, so you can then walk
to your destination. You ripped off Uber then by using your two perfectly good
feet, and showed those capitalist fatcats by not even using their service!

The comparison to a serious hurt child is not an appropriate comparison (also,
"think of the children!"), because the service is not fungible in that case.

Is someone going to show up and make the same arguments for why people with
higher incomes shouldn't pay higher taxes? If there's nothing wrong with
progressive taxation, then there's nothing wrong with progressive pricing, and
the only difference is that you're forced the pay taxes while you're not
forced to purchase services from any given vendor.

~~~
sushid
First, you're basing your argument on a mistaken premise that progressive
taxation is okay. Second, it's relatively clear that you're going to be paying
a certain rate in taxes, whereas your Uber prices can now have a huge,
unforeseen jump in pricing because <insert personal reason here>. It's the
difference between knowing you have to pay a higher rate because you're not a
"Shopper's club member" vs. having an arbitrary fee added to your grocery at
checkout because you're carrying a Louis Vuitton bag.

And I'm not arguing this from a purely economics perspective. Yes, I know
discriminatory pricing has its place in our society today and yes, I know it's
profit maximizing, "fair," etc. But what's different here is that unlike
airlines that have an algorithm deciding the same price for anyone buying that
seat at that particular time, Uber can discriminate against you for very
personal reasons, or general reasons that can discriminate against the racial
makeup of a neighborhood, the disabled, etc.

Hats off to your sense of duty to capitalism that'd make Milton Friedman
proud, but the world doesn't work like an Econ 101 textbook. If Uber's profit
maximizing algorithm is discriminatory against protected classes, it's
illegal. If it's profit maximizing by overcharging people lulled into usage
due to habit, dying phones, etc. it's still predatory.

P.S. regarding your "think of the children" critique, I'm simply offering a
direct counterexample to your "whatever price you pay and agree to == not
getting ripped off." According to you, it does seem like you can be ripped off
after all, even at a price you were willing to pay.

------
askafriend
Your airlines and hotels are already doing this along with the travel industry
in general (and they've been doing it for a long time). Amazon will almost
definitely do this more broadly one day (they do some version of this now
already). Physical retail will definitely do this once the in-store tech to
manage the pricing complexity catches up. Sure, the degree and granularity to
which each of these industries implement something like this may vary but I
think that at the end of the day, it just makes sense from a business
perspective.

So while the word "Uber" might trigger some people, I think there's a broader,
more interesting conversation to be had here outside of the Uber context.

~~~
manmal
I read that Amazon in fact already does it, too. They price high-volume goods
competitively, but niche products, not so much.

~~~
takeda
Nearly any cleaning supplies from my experience are much more expensive in
Amazon than in a local store.

For example:
[https://www.amazon.com/dp/B00J5HK3MY](https://www.amazon.com/dp/B00J5HK3MY)
one can of Ajax (same size) costs $0.99 in Rite Aid.

Perhaps people who are buying cleaning supplies from Amazon are so used to it
that they never visit local stores?

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thr0waway1239
>> What guarantee do users have that they won't be individually selected to
receive a higher price?

As long as Uber is not the only means of transport, this issue should take
care of itself. Besides, as another comment points out, isn't this pretty much
standard across industries?

Not sure what this has to do with Uber in particular which doesn't apply to
any other company.

~~~
rootlocus
> Not sure what this has to do with Uber in particular which doesn't apply to
> any other company.

How would you fell if prices on amazon were higher for you than for others
because of your income, residence or historical purchase data? With all the
margins going to amazon instead of the sellers.

~~~
DrScump
This happens _all the time_ , but it depends on user ignorance or apathy.

Just shop using different browsers or devices. Use incognito modes for
everything. Use multiple entry points. Use multiple loyalty cards (and don't
intermix credit cards amongst them.

For a real-world example, I use 4 different Starbucks cards. Each gets very
different reward offers, every time. Y

~~~
thr0waway1239
I don't disagree. If you have done this much research though, you could
actually set up a little case study on this, write an eBook with nothing more
than screenshots on how the price changes, and put it up for sale as something
which will save people atleast $x per month. :-)

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wyager
Ok? That makes perfect sense. They're not a charity.

People like to use this as an excuse to attack capitalism in general, a la "if
_corporations_ didn't run things, we would charge as little as possible
instead of as much as possible". However, this is entirely missing the point;
it's _critically important_ that businesses charge as much as they can get
away with. Why? Because prices are how market information is communicated, and
high profit margins indicate an imbalance between supply and demand. If Uber
charged the bare minimum they could get away with and still survive, there
would be no incentive for competitors to come in and attempt to undercut them,
leaving the supply/demand mismatch as it is. In a zero-overhead idealized
market, competitors would keep coming in until profit margins were within
epsilon of zero; obviously we can't do exactly that in real life, but we want
to get as close to that as possible.

~~~
yorwba
> If Uber charged the bare minimum they could get away with and still survive,
> there would be no incentive for competitors to come in and attempt to
> undercut them, leaving the supply/demand mismatch as it is.

Why? If supply/demand is mismatched in such a way that a competitor is
necessary, then some potential Uber customers are not being served. Then
either the customer can't even afford the minimal price, in which case
competition doesn't help, or Uber's service is unavailable for some reason,
which provides incentive for a competitor to come in and capture the market
segment.

It is not absolutely necessary that everyone charge as much as they can; it
just happens to be the case that money tends to be controlled by people who
would like increase its amount.

In the hypothetical case of Uber turning into a charity that charges as little
as possible, the price would simply include the market information that
someone is willing to use their money to subsidize everyone's fares.

------
stevenwoo
Every company with lots of consumer data is trying to use it to increase
purchases and purchase prices. The interesting thing is they can put some
classic psychology theories to the test and find how closely the hypothetical
matches reality or try things out to see what consumers do.
[https://www.theatlantic.com/magazine/archive/2017/05/how-
onl...](https://www.theatlantic.com/magazine/archive/2017/05/how-online-
shopping-makes-suckers-of-us-all/521448/)

------
drak0n1c
Price discrimination in moderation can be a good thing for business health and
society. If a business can detect that a person can afford to pay more for the
service, then that additional inflow effectively subsidizes the service for
people who can only afford using the service at the cheapest rates.

~~~
tzmudzin
That only works if:

1\. Profits are capped.

2\. The company cannot gauge or drop service to non-profitable customers.

Neither applies.

~~~
tylerhou
1\. Profits are inherently capped. I choose an upper bound of the value of
everything on Earth.

2\. Every private entity, in free market capitalism, has the right to refuse
service to a customer if providing that service is not beneficial to said
entity (bar some race, age, etc. issue). Are you making an argument to remove
that right?

------
Animats
This blows a hole in Uber's claim that they're just a booking service that
takes a cut. They're clearly a reseller, which makes drivers their employees.

~~~
dnautics
Can you explain how reselling makes them employees?

~~~
eridius
Uber's not just "taking a cut" anymore. They're dictating the price to the
customers, and the amount they pay the drivers, and those two values
apparently aren't actually related to each other.

~~~
dnautics
Are authors employees of publishing companies?

~~~
sbierwagen
Authors can negotiate how much they get paid per word, Uber drivers can't.

------
cameldrv
Uber is trying to outdo the U.S. healthcare system. You can't know the price
until you need to leave. They have your calendar. Sure would be a shame to be
late to your meeting/date, better pay up. They know where you live. They will
happily take you from your home into the city for cheap. Need to get home
somehow? Train shut down for the night and you have no alternative? Add $30
because fuck you. Oh by the way, if you try to make any software that compares
our prices with anyone else's, we'll sue you. It's like having to do battle
against HFT bots by reading the stock prices in the back of the newspaper. No
thanks, I'll just drive and avoid all of this hassle.

------
al_chemist
"Charging as much as possible" is not evil. "Charging based on information
acquired by your phone spying on you or your social account tracking" is evil.

------
jasonlfunk
You've found market price when buyers complain but still pay. - Paul Graham.

If this is true, it's obviously different for everyone. And as long as Uber
doesn't have a monopoly, this sounds perfectly reasonable to me.

------
holydude
I do not have a problem with this. Whatever makes sense to make a profit. The
only thing i detest about Uber is its aggressiveness and willingness to
exploit every loophole they can find.

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JCzynski
It's perverse that this article is talking about AI figuring out price
discrimination and somehow manages to turn that into "and this will be
terrible for the poor".

Price discrimination is _wonderful_ for the poor. Extract tons of money from
the rich who don't give a shit, but still sell the service to poorer people at
a price they can afford, with almost all the same benefits.

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FullMtlAlcoholc
For everyone defending this practice, how do you feel about an employer paying
you less for doing the same work as your peers?

~~~
vitaminbandit
>> Thanks to complaints from Uber drivers, who were beginning to suspect that
the ridesharing company was charging customers more with "upfront pricing" but
not paying drivers more in turn

It sounds like they aren't paying "my peers" more. They're just charging more
and taking a bigger cut.

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jmnicolas
What's with the bad press about Uber lately ? Doesn't seem "organic" to me,
more of a concerted effort by some org that want them down.

Not saying they don't deserve it, but somehow they have a scandal in the news
every other week since a few months.

~~~
petre
Predatory business practices, user tracking, operating in a grey area of local
laws and other antisocial behaviour will almost always lead to bad press. Just
take a look at Monsanto.

~~~
jmnicolas
Yeah but I see much more of Uber in the press than Monsanto.

------
golergka
So, it's essentially the same as haggling with a regular taxi driver. (FYI,
just in case: not every taxi in the world is officially registered and is
using a meter). But because it's Uber, this common practice becomes evil.

------
algesten
> Uber isn't looking at individual customers' circumstances, the company
> claims, but group statistics

Given the reputation of this company, I wouldn't be at all surprised to hear
this change at some point in the future.

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ThrustVectoring
Two words: disparate impact.

I'd be very concerned that they're somehow charging more to a protected class.
Yeah, pricing is a bit of a black box, but that isn't a defense against
"blacks end up getting charged $1.2 for every $1 whites get charged for
equivalent rides". There's enough protected classes that you can basically do
p-fishing. "Uber price discriminates against black people" not statistically
significant? Run the numbers again with Asian instead, and see if it comes up.
Or women. Or religion (rides to church service more expensive? Whoops.)

~~~
benmarten
lol! any proof?

~~~
LoSboccacc
I think parent means to search it in reverse: split the pricing by class
enough and eventually you'll find something that correlates. That's a quest
for a modern ambulance chaser to be sure, but I can see some merit in it.

~~~
ThrustVectoring
Yeah, it'd be something that could possibly be dug up. Many location-based
systems for price discrimination can run into similar issues - see
[https://en.wikipedia.org/wiki/Redlining](https://en.wikipedia.org/wiki/Redlining)

Note that being purely profit-driven through your pricing scheme isn't a good
defense. There could easily be a "taxis are racist and won't go into certain
areas, therefore Uber has less competition serving black neighborhoods,
therefore Uber can increase their prices there."

