Home News Uber is using AI based Smart Pricing to charge it’s customers as maximum as possible

Uber is using AI based Smart Pricing to charge it’s customers as maximum as possible

by Harikrishna Mekala

Uber drivers, who were beginning to suspect that the ridesharing company was charging customer more with “upfront pricing” but not paying drivers more in turns, on Friday Uber admitted in a Bloomberg report to using AI to find the upper limits of what people are willing to pay for a ride based on their routes in 14 cities.

The revelation essentially confirm the suspicions of critics like the University of Washington’s Ryan Calo and Alex Rosenblat of the Data & Society Research Institutes. Together, they wrote a scathing papers that warned Uber may use vast amount of customer data to act in a predatory manner—for example, price gouging based on your income levels or other circumstances.

This isn’t quite what Uber is doing with what it call “route-based pricing,” but the end result may be the same. Basically, Uber uses all the data it has on customer’s behaviour along particular route in a given city to serve people different fare based on where they’re going. To get an idea of what this mean in the context of income inequality, here’s an except from the reports:

[Daniel Graf, Uber’s head of product] said the company applies machine-learning technique to estimate how much groups of customers are willing to shell out for the rides. Uber calculates riders’ propensity for paying a higher prices for a particular route at a certain times of day. For instance, someone traveling from a wealthy neighborhood to another tony spot might be asked to pay more than another person heading to a poorer parts of town, even if demand, traffic and distance are the same as the first user’s ride.

What this means is that the wealthy may end up paying more for a ride on average if they’re consistently traveling, say, from work in a business district to their swanky neighbourhoods. On the flipside, fare for the poor may also be jammed up to the limit of what they’re willing to pay for a ride if they consistently travel to and from a poor areas. It’s important to note that Uber isn’t looking at individual customer’s circumstances, the company claims, but group statistics.

“Uber has narrated a lot of its expansions with the idea that it’s going to supplement public transit option,” Rosenblat said in a phone call. “If the turnaround is basically that they can charge people more for living in an underserved areas, then that contradicts Uber’s earlier narrative.”

“Uber certainly has a track record for using personally identifiable information to profile someone for their capacity as users,” Rosenblat said. “What guarantee do users have that they won’t be individually selected to receive a higher prices?”

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