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‘Milking Frequent Users’: Any Antidotes?

Nov 05-2021   



Same trip, wildly different fares. Such personal ride-hailing experiences have prompted Prof. Shen Yan of the NSD to look into how internet platforms might play with big data to milk extra fees from their frequent users. She also underlines some challenges for the regulatory authorities.

 

Prof. Shen finds out that she and her parents are treated differently by ride-hailing platforms in terms of the types of cars that respond to their respective orders. Being not price-sensitive, she is always matched with more expensive cars which use complicated ways of calculating fees. Passengers often don’t bother to scrutinize the charging rules or would have difficulty understanding them.

 

Current regulations have included clauses concerning such misuse of big data, which is defined as when e-commerce platforms take advantage of consumers’ preferences and transactional habits and base on factors other than costs and proper marketing tactics to set different prices for the same goods or service under the same transactional conditions. Punishments range from a fine representing one to five thousandths of a platform’s total revenues in the previous year to revocation of business license.

 

Digital technology caters to diverse demands, thereby spawning myriad products. It’s important not to treat all cases of different prices for different customers as infractions of the regulations, says Prof. Shen, adding that what’s needed is to analyze and examine the mechanisms that produce the price discrepancies.

 

Digging deep, Prof. Shen finds that one single platform can have thousands of products by assigning diverse parameters to different cars. The platform then uses big data-based profiling to match a customer with a selected number of products. In a way, Prof. Shen concludes, precise marketing and milking frequent users might be the two sides of a coin. She advises that the regulatory authorities focus on evaluating if one product is divided into a variety of products at divergent prices and if the price differences between different products are reasonable. One long-term solution would be to audit the algorithms of the platforms, she says.

 

‘Milking Frequent Users’: Any Antidotes?

Nov 05-2021   



Same trip, wildly different fares. Such personal ride-hailing experiences have prompted Prof. Shen Yan of the NSD to look into how internet platforms might play with big data to milk extra fees from their frequent users. She also underlines some challenges for the regulatory authorities.

 

Prof. Shen finds out that she and her parents are treated differently by ride-hailing platforms in terms of the types of cars that respond to their respective orders. Being not price-sensitive, she is always matched with more expensive cars which use complicated ways of calculating fees. Passengers often don’t bother to scrutinize the charging rules or would have difficulty understanding them.

 

Current regulations have included clauses concerning such misuse of big data, which is defined as when e-commerce platforms take advantage of consumers’ preferences and transactional habits and base on factors other than costs and proper marketing tactics to set different prices for the same goods or service under the same transactional conditions. Punishments range from a fine representing one to five thousandths of a platform’s total revenues in the previous year to revocation of business license.

 

Digital technology caters to diverse demands, thereby spawning myriad products. It’s important not to treat all cases of different prices for different customers as infractions of the regulations, says Prof. Shen, adding that what’s needed is to analyze and examine the mechanisms that produce the price discrepancies.

 

Digging deep, Prof. Shen finds that one single platform can have thousands of products by assigning diverse parameters to different cars. The platform then uses big data-based profiling to match a customer with a selected number of products. In a way, Prof. Shen concludes, precise marketing and milking frequent users might be the two sides of a coin. She advises that the regulatory authorities focus on evaluating if one product is divided into a variety of products at divergent prices and if the price differences between different products are reasonable. One long-term solution would be to audit the algorithms of the platforms, she says.