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Uber Is Using AI to Charge People as Much as Possible for a Ride

35 points by aceperry 9y ago

thr0waway1239 9y ago
>> 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 9y ago
  > 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.
  - LoSboccacc 9y ago
    Amazon did try and user feedback was enough back in the day to make them stop - it wasn't the dominant retailer back then and users had much more power, so there's that. Byw plenty other retailers already do or did adjust prices: Apple users are commonly targeted for being price insensitive.
  - bunkat 9y ago
    I'm pretty sure Amazon already does this - prices are different based on your location and purchase history at the very least. Sometimes its obvious but other times they will just push a different seller to the top of the list which effectively changes the price. You can chalk it up to their 'dynamic pricing' but it always seems to favor me over my wife (the majority of our purchases go through my account).
  - DrScump 9y ago
    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 9y ago
      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. :-)
askafriend 9y ago
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 9y ago
  I read that Amazon in fact already does it, too. They price high-volume goods competitively, but niche products, not so much.
  - takeda 9y ago
    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?
  - FullMtlAlcoholc 9y ago
    They also perform micro optimizations based upon what information they can gather on you. For instance, they may price an item higher if they can determine that you're using a Mac from the user agent
  - deleted 9y ago
    [deleted]
- santaclaus 9y ago
  > Amazon will almost definitely do this more broadly one day What is stopping networks of Amazon users from forming co-ops where each purchase is checked against and ordered by the user with the lowest price?
minimaxir 9y ago
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 9y ago
  "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.
  - jkezfvjnawu 9y ago
    "One price for all is a cornerstone of our social contract. Discarding it will place that contract in danger." Ever bought a plane ticket?
  - tylerhou 9y ago
    >One price for all is a cornerstone of our social contract. Discarding it will place that contract in danger. ...but we've had price discrimination for decades in the form of coupons, airplane tickets, and senior discounts. I don't see a particularly loud revolution, at least where I live.
    - bryanlarsen 9y ago
      Airlines are one of the most hated industries, seen much good press about United. And their price discrimination is fairly transparent, it's the opaque discrimination that gets people ranting. Nobody likes being ripped off. Coupons & senior discounts are tolerated both because they're transparent and everybody can or will be able to use them.
  - 9y ago
ThrustVectoring 9y ago
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 9y ago
  lol! any proof?
  - LoSboccacc 9y ago
    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 9y ago
      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."
wyager 9y ago
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 9y ago
  > 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.
- algesten 9y ago
  An argument that only works if it is possible to compete. Most "markets" seem to consolidate into monopolies at the same time as entry to that market is tightly controlled. Telco/Airlines/ISP/Music etc. Uber has different situations in different places, but to me it seems that they only have real competition in some cities in the US.
ncomputersorg 9y ago
upvoted and copied to https://ncomputers.org/news https://ncomputers.org/news
drak0n1c 9y ago
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 9y ago
  That only works if: 1. Profits are capped. 2. The company cannot gauge or drop service to non-profitable customers. Neither applies.
  - tylerhou 9y ago
    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 9y ago
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 9y ago
  Can you explain how reselling makes them employees?
  - eridius 9y ago
    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 9y ago
      Are authors employees of publishing companies?
      - sbierwagen 9y ago
        Authors can negotiate how much they get paid per word, Uber drivers can't.
jasonlfunk 9y ago
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.
jasonlfunk 9y ago
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.
FullMtlAlcoholc 9y ago
For everyone defending this practice, how do you feel about an employer paying you less for doing the same work as your peers?
- vitaminbandit 9y ago
  >> 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.
- yorwba 9y ago
  I would be okay with it so long as it's based on clear criteria that I can influence to match the pay of my colleagues.
al_chemist 9y ago
"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.
stevenwoo 9y ago
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-online-shopping-makes-suckers-of-us-all/521448/ https://www.theatlantic.com/magazine/archive/2017/05/how-onl...
jmnicolas 9y ago
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 9y ago
  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 9y ago
    Yeah but I see much more of Uber in the press than Monsanto.
golergka 9y ago
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.
holydude 9y ago
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.
algesten 9y ago
> 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.
JCzynski 9y ago
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.
cameldrv 9y ago
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.

35 points by aceperry 9y ago

>> 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 9y ago
> 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.
- LoSboccacc 9y ago
  Amazon did try and user feedback was enough back in the day to make them stop - it wasn't the dominant retailer back then and users had much more power, so there's that. Byw plenty other retailers already do or did adjust prices: Apple users are commonly targeted for being price insensitive.
- bunkat 9y ago
  I'm pretty sure Amazon already does this - prices are different based on your location and purchase history at the very least. Sometimes its obvious but other times they will just push a different seller to the top of the list which effectively changes the price. You can chalk it up to their 'dynamic pricing' but it always seems to favor me over my wife (the majority of our purchases go through my account).
- DrScump 9y ago
  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 9y ago
    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. :-)

askafriend 9y ago

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 9y ago
I read that Amazon in fact already does it, too. They price high-volume goods competitively, but niche products, not so much.
- takeda 9y ago
  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?
- FullMtlAlcoholc 9y ago
  They also perform micro optimizations based upon what information they can gather on you. For instance, they may price an item higher if they can determine that you're using a Mac from the user agent
- deleted 9y ago
  [deleted]
santaclaus 9y ago
> Amazon will almost definitely do this more broadly one day What is stopping networks of Amazon users from forming co-ops where each purchase is checked against and ordered by the user with the lowest price?

minimaxir 9y ago

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 9y ago
"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.
- jkezfvjnawu 9y ago
  "One price for all is a cornerstone of our social contract. Discarding it will place that contract in danger." Ever bought a plane ticket?
- tylerhou 9y ago
  >One price for all is a cornerstone of our social contract. Discarding it will place that contract in danger. ...but we've had price discrimination for decades in the form of coupons, airplane tickets, and senior discounts. I don't see a particularly loud revolution, at least where I live.
  - bryanlarsen 9y ago
    Airlines are one of the most hated industries, seen much good press about United. And their price discrimination is fairly transparent, it's the opaque discrimination that gets people ranting. Nobody likes being ripped off. Coupons & senior discounts are tolerated both because they're transparent and everybody can or will be able to use them.
- 9y ago

ThrustVectoring 9y ago

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 9y ago
lol! any proof?
- LoSboccacc 9y ago
  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 9y ago
    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."

wyager 9y ago

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 9y ago
> 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.
algesten 9y ago
An argument that only works if it is possible to compete. Most "markets" seem to consolidate into monopolies at the same time as entry to that market is tightly controlled. Telco/Airlines/ISP/Music etc. Uber has different situations in different places, but to me it seems that they only have real competition in some cities in the US.

ncomputersorg 9y ago

upvoted and copied to https://ncomputers.org/news https://ncomputers.org/news

drak0n1c 9y ago

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 9y ago
That only works if: 1. Profits are capped. 2. The company cannot gauge or drop service to non-profitable customers. Neither applies.
- tylerhou 9y ago
  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 9y ago

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 9y ago
Can you explain how reselling makes them employees?
- eridius 9y ago
  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 9y ago
    Are authors employees of publishing companies?
    - sbierwagen 9y ago
      Authors can negotiate how much they get paid per word, Uber drivers can't.

jasonlfunk 9y ago

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.

jasonlfunk 9y ago

FullMtlAlcoholc 9y ago

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

vitaminbandit 9y ago
>> 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.
yorwba 9y ago
I would be okay with it so long as it's based on clear criteria that I can influence to match the pay of my colleagues.

al_chemist 9y ago

"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.

stevenwoo 9y ago

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-online-shopping-makes-suckers-of-us-all/521448/ https://www.theatlantic.com/magazine/archive/2017/05/how-onl...

jmnicolas 9y ago

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 9y ago
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 9y ago
  Yeah but I see much more of Uber in the press than Monsanto.

golergka 9y ago

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.

holydude 9y ago

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.

algesten 9y ago

> 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.

JCzynski 9y ago

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.

cameldrv 9y ago

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.