Federal Trade Commission (FTC) Chair Lina Khan has raised serious concerns about the potential misuse of artificial intelligence (AI) by airlines, specifically the possibility of charging higher prices to passengers attending funerals.
During the 2024 Fast Company Innovation Festival, Khan shed light on the risks associated with AI, particularly its ability to facilitate fraud and price discrimination. She emphasized that AI tools are accelerating traditional online scams like phishing and introducing new forms of fraud, such as voice cloning. Khan also warned about retailers utilizing AI-powered surveillance technology to adjust prices for specific shoppers.
The FTC is actively investigating AI’s role in price discrimination, drawing a distinction between this practice and dynamic pricing, which adjusts prices based on market conditions. Khan pointed out that AI could lead to varied prices based on personal data collected by digital companies. She illustrated this with examples such as people with nut allergies being charged more for granola bars or restaurants utilizing QR codes for personalized menus. “Or somebody being charged more for an airplane ticket because the company knows that they just had a death in the family and need to fly across the country,” Khan said.
In July, the FTC issued a market inquiry to eight companies, requesting information on “surveillance pricing products and services” that utilize consumer data. Khan stressed the importance of understanding the implications of these practices for consumers.
Khan concluded by posing a critical question: does society want to accept such targeted pricing or should regulations be implemented to prevent it? She also acknowledged that dynamic pricing, prevalent in areas like ride-sharing, has accustomed people to variable pricing.
These concerns raised by Khan about AI-driven price discrimination come amidst heightened scrutiny of tech companies’ data practices. Last week, the FTC criticized major tech firms like Amazon.com Inc. and Meta Platforms Inc. for their extensive data collection and monetization practices, which pose significant privacy risks for consumers.
Moreover, in December, CNBC’s “Mad Money” host Jim Cramer criticized Khan’s policies, arguing that her stance on mergers and acquisitions negatively impacts investor returns. Cramer referred to her as a “one-woman wrecking crew” for stock portfolios, highlighting the tension between regulatory oversight and market performance.
In July 2023, Elon Musk accused Khan of bias and overreach in the FTC’s privacy investigation into Twitter (now known as X). Musk’s allegations underscore the contentious relationship between the FTC and tech giants as they navigate the complex landscape of data privacy and consumer protection.
In April, Apple Inc. was criticized by Jon Stewart for allegedly blocking an interview with Khan on his podcast. This incident further highlights the ongoing antitrust investigations into Apple’s business practices and market dominance.
