Thank you, Chair.
Thank you to this committee for the honour of appearing. As you heard, I run the master of public policy program at McMaster University. I'm also a contributing columnist for The Globe and Mail's report on business, writing monthly about technology and public policy. I've written about algorithmic pricing. The title was “Algorithms are raising prices for everything. This must stop”—I don't write the headlines. I also host Lately, The Globe and Mail's weekly business podcast. I co-host CIGI's policy show Policy Prompt.
Finally, I am the co-author of a book about competition in Canada. It's called The Big Fix: How Companies Capture Markets and Harm Canadians. My co-author is Denise Hearn. I tell you that in order to contextualize and offer that I'm coming to the committee as a thinker, as somebody who can maybe offer a broader context for these trends. One of the chapters in this book, one of my favourites, is called “Add to Cart: Trust”. It was excerpted in The Walrus, if you're looking for something to scroll through during committee.
I want to mention it, not to give you something to click on but because of what the text reminds the reader that today, “the prices of most goods”—and some services, as we're hearing—“are not set by humans but by automatic processes—algorithms. The use of these systems and their terms are [rarely] disclosed to shoppers, although the aim is often to extract the highest possible price from them. Using intrusive personal data”—this is sometimes called surveillant pricing—“sometimes acquired directly through interactions with consumers”—it's voluntarily shared or collected as some of their exhaust—“and more often bought by third-party data brokers, companies now know our intimate spending habits and can calculate our maximum willingness to pay.” We also state that “online personalized pricing is a different beast. It requires the use of highly invasive data collection and personal identification techniques. This kind of sophisticated price calibration is happening more often, without any sort of consumer consent, disclosure, or labelling.”
I’ve also contributed to journalism covering some of the recent Uber price change, called “upfront pricing”, which you've heard about. This strategy removes the proximate predictability, or some level of predictability, regarding pay that drivers previously had.
I should have said earlier that, back in 2022, I did some broader work on gig work regulation for the Province of Ontario, focusing on gig workers, as a member of Ontario's workforce recovery advisory committee. During that time, in my private time, I delivered for Instacart. I wanted to have the direct experience of having an algorithm for a boss. We can chat about that later, if you want. I didn't like it very much.
I resent how so much of pricing—for consumers and for workers in this monopsonistic gig context—has become an algorithmic hall of mirrors. A columnist who writes for The Atlantic, Charlie Warzel, called this “pricing hell” in a recent column that I really appreciated. At the same time, I find myself quite encouraged by the policy progress, not just in the U.S. but also in Canada, on ending junk fees. We've had a newish focus on identifying and eliminating these.
I'll wrap by telling you a little bit about junk fees and pricing and how they fit into gig work.
When the FTC took on junk fees, they mentioned the following. Forgive me, but all of this is a direct quote. You'll be thinking, “The researcher came and she read us things”, but I'll be ready to talk later. The FTC said:
Food delivery apps are notorious for obfuscating delivery and service fees. A recent survey showed one company’s hidden fee burden is about 15 percent of transaction volume. This company received 288 million orders in 2021 in the U.S. and had an average sale [price] of about $31. Putting these numbers together...this company collected about $1.3 billion from consumers in junk fees.
These were fake fees, irrational fees, passed on to people.
Using the most conservative assumptions, a similar calculation for a competitor—which in the same survey had a hidden fee rate of 7.5 percent—produces $1.5 billion in junk fees. In addition, the leading grocery delivery service had about $25 billion in transaction volume...with about 8% being junk fees.... [B]ased on the best publicly available information—
Again, a lot of this is quite opaque.
—junk fees in food delivery are an estimated $5 billion annually across the [United States].
I've read your motion. I know you're in the process of preparing to study more deeply what these fees are, how they are calculated, what is explained to end-users and what is not, and whether they are ultimately reasonable. I look forward to contributing to your discussion.
Thank you.