Artificial Intelligence is undoubtedly revolutionizing various industries, ranging from e-commerce to finance fields. But experts are now warning about a serious hidden threat, that is, AI price fixing.
In the background, pricing algorithms may be working in a way that they are learning to coordinate prices in ways that could harm the market competition as well as the consumers.
This silent form of AI market manipulation have raised concerns among various regulators worldwide.
Many companies are there who use AI pricing algorithms that helps them to automatically set the product prices based on the growing demand, market competition, and even the consumer behavior.
These algorithms can change the product prices within seconds, thus helping various businesses to stay in the market competition and maximize various profits.
However, when multiple companies start to use the similar AI tools, there’s a growing AI collusion risk where algorithms continuously over time start to learn to keep prices high rather than taking a look over the market..
This usually doesn’t mean that the companies are intentionally cheating or doing this. Rather, it’s the AI systems themselves that start detecting mutual benefits in avoiding the price wars.
Such algorithmic collusion could occur even without the direct communication with the AI tools or even human instruction, thus making it extremely hard to detect these strategies or prove them.
Several studies have already suggested that the AI systems when continuously trained on market data, they can independently align with the pricing patterns, even when the AI developers did not intend them to.
This creates a dangerous “grey zone” where the market fairness is quietly disturbed by the intelligent code.
Governments and economists are also calling for stronger market regulation AI frameworks that would work in order to prevent this type of anti-competitive behavior.
The challenge lies in determining the right time when algorithmic decisions try to cross the line into the illegal pricing coordination.
Authorities in the U.S., U.K., and Europe have now begun studying how AI can unintentionally disturb or make the markets unethical.
Experts believe that proper handling the AI competition concerns will require a mix of technology and some regulation rules. Companies may also need to make their algorithms explainable, so that regulators can see how various pricing decisions are made.
