June 27th, 2012
Pursuant to our discussion yesterday, Galley Lawyer X sends in the following thoughts:
I have a hard time seeing how targeted pricing would be illegal in and of itself. Your African-American zip code hypothetical could be in violation of the Civil Rights Act or something (although that’s just a guess), but generally speaking ultimate price discrimination is fine without some other factors present. So, for example, if Amazon used Mac OS info in such a way as to maximize Kindle marketshare against the iPad through discriminatory pricing (I don’t know how, just say they do), then the FTC might start asking some questions. It goes without saying, but this is a much riskier thing to do now than in 2 years if Romney wins.
Now, this kind of flexible price attribution in a basically oligopolistic market like, say, airlines might open the companies up to civil Sherman Act claims on a signalling theory. “They say they’re targeting zip codes, but they’re really telling each other what the new fixed price will be. So pay me my treble damages.” These cases take forever to resolve even when entirely frivolous. So some companies might not want to take the risk.
This might make a pretty interesting law review article if it hasn’t been done yet.
Update: Galley Friend G.R. writes in with a note that CA has a law that’s close to on-point in regards to auto insurance.
[…] our discussion of price manipulation at Amazon is this interesting piece in the FT on algorithm-based price […]