Walmart was recently awarded patents by the US Patent and Trademark Office (USPTO) for artificial intelligence tools that help make pricing decisions. These patents are gaining attention on social media this week as consumers worry about the future of dynamic pricing and so-called observational pricing, the practice of charging people different prices for the same goods and services based on their unique attributes.
One of the new patents, US-12524776-B2, “dynamic and automatic updating of item prices” on e-commerce platforms. The patent application explains that it combines price elasticity data and forecasted demand for a particular item, and then an algorithm generates a “first discount price.
When price elasticity data and forecasted demand data are not available, the platform creates a “limit price” that allows a range to be selected to set a new price.
Another patent, US-12572954-B2, recently issued to Walmart, addresses the use of machine learning to predict demand for various items and recommend prices. The scheme in the document even suggests that third-party data could be used to set prices, a controversial practice used by other businesses such as airlines to set prices.
Walmart announced earlier this month that with a goal of every Walmart location using the technology by the end of the year, the company will introduce digital shelf tags that allow the company to quickly change the price consumers see in the store.
The patents granted to Walmart cover e-commerce, not brick-and-mortar locations, but it’s easy to see how AI tools could be used in the future to create split-second price changes based on any number of factors, such as the time of day or the number of people already in a given brick-and-mortar store.
Walmart did not respond to Gizmodo’s emailed questions on Thursday, but claimed Financial Times patents “have nothing to do with dynamic pricing.” The logic, as best we can put it, is that one of the patents in question is “downgrade-specific,” though perhaps not clearly, to suggest that prices will only go down.
Another claim, according to the Financial Times, was that another patent was “intended to make decisions for business groups, not technology”, and it seems like a distinction without a difference when it comes to the practical reality of how it might be applied in the real world.
Hypothetically, it doesn’t matter if a store manager or someone in the central office is pinged to give final approval for a price adjustment. This appears to simply be a quality control to benefit Walmart, not serious protection for consumers from rapid price changes.
At least a dozen states are considering legislation this year to regulate dynamic or observational pricing, although New York is the only state to pass legislation on the subject. When an algorithm and personal data are used to set a price, consumers should be notified by Washington Post subscribers recently. received an email about.
Democrats have introduced bills in both the Senate and the House prohibit control prices in grocery stores, but with Republicans in control of the House, Senate and White House, passage of this legislation seems unlikely.
