The convenience of comparing airfares at a single travel website while browsing from a smartphone is undeniable. But these modern perks can have a hidden cost: Researchers have uncovered multiple instances of travel and retail websites steering customers toward more expensive prices depending on factors such as whether customers are on a mobile phone, use a particular browser or have purchased particular items in the past.
Nine of 16 travel and retail websites, including Home Depot, Sears, Orbitz, Priceline and Expedia, personalize search results. Seven of these sites show customers only a subset of prices, researchers report.
“It’s a concrete example of why you should care about companies tracking your behavior online,” says computer scientist Christo Wilson of Northeastern University in Boston, who led the study. “It affects your pocketbook.”
Companies have always tried to figure out the highest price that customers are willing to pay. But the era of big data has changed the game, says law professor Ryan Calo, a specialist in technology policy at the University of Washington in Seattle.
“There’s a difference between deciding most people will pay $1 for a Snickers bar versus setting a price because of being able to figure out that a consumer is really hungry because they’re breast-feeding, or high or just ran 10 miles,” Calo says. “There’s so much information in the hands of these companies.”
Uncovering the price steering and discrimination involved several experiments, including one in which the researchers created clean accounts without cookies or browser history on several of the websites. In one instance, the researchers found that users who searched Home Depot from their desktops received products with an average price of $120, while those who searched from their smartphones were steered toward products with an average price of $230.
Home Depot, along with Travelocity, further personalized smartphone searches. Browsing Travelocity with the browser Safari on an iPhone, for instance, led to slightly different hotels, and in a much different order, than did browsing with Chrome on an Android. For iPhone users, prices were $15 cheaper on about 5 percent of hotels.
There’s a difference between deciding most people will pay $1 for a Snickers bar versus setting a price because of being able to figure out that a consumer is really hungry because they’re breast-feeding, or high or just ran 10 miles.
— Ryan Calo
“The most surprising thing to me is the diversity of stuff that we found; everyone’s doing something different,” says Wilson. “They’re still playing with big data to maximize sales.”
Northeastern computer scientist Aniko Hannak will present the research November 6 at the 2014 Internet Measurement Conference in Vancouver.
Some companies’ data exploration entails what marketing researchers call A/B testing, in which two groups are shown identical products except for one factor, to see if that variable affects consumer behavior. Wilson and colleagues found that Expedia and Hotels.com engage in A/B testing by steering a subset of users to cheaper products and a subset toward more expensive ones. These tests may help the sites determine whether users who see expensive hotels at the top of the page tend to book more expensive hotels, says Wilson.
Expedia confirmed this testing, he says. In fact, the researchers shared their results with six of the companies that implemented some form of personalization. The research team received responses only from Orbitz and Expedia. Orbitz allowed the researchers publish its letter, saying in part that Wilson and his colleagues mischaracterized the company’s business practices by suggesting that they were detrimental to consumers.
There’s no reason for companies not to engage in these tactics, notes Calo. They are legal, and corporations may use them to try to gain a competitive edge. But the practices put a burden on the consumer, who might have to search multiple sites to find the cheapest product or use a browser with a cleared, cookie-free search history.
But that soon may change, Calo says. The Federal Trade Commission announced on October 21 its appointment of Ashkan Soltani as the agency’s chief technologist. Soltani, an independent researcher and journalist, is known for his interest in protecting consumers’ online privacy and security.
Editor’s Note: This article was updated November 10, 2014 to correct a misstatement about iPhone versus Android hotel prices. The prices were $15 lower for iPhone users for 5 percent of hotels, not on average.