With artificial intelligence (AI) being a popular emerging technology, companies are rushing to implement it in new and exciting ways. This is happening across several industries due to its wide-ranging applications. AI can process large amounts of data, extract meaningful insights, identify patterns, and create predictions. However, there are concerns that AI may be used to maximize profit at the expense of consumers.
Recently, Kroger has invested in a new AI technology called the Enhanced Display for Grocery Environment (EDGE) system. The purpose of this system is to be installed in stores so they can start using “dynamic pricing.” This has caused controversy because the technology uses facial recognition to determine the customer’s demographic. That information will determine the maximum amount of money an individual would be willing to pay. The facial recognition software will even store customers’ faces and charge them the same amount each visit because they were willing to pay for it the last time.
Collecting and analyzing customer data could be considered a significant privacy violation and brings up many questions on the ethics of using AI, especially when the primary purpose of this technology is profit maximization. While leveraging AI for a personalized experience can offer value, using facial recognition to analyze demographics and set “dynamic pricing” crosses significant ethical boundaries. It sacrifices customer loyalty and prioritizes profit at the cost of individual rights.
Additionally, Kroger has agreed to buy Albertsons, an American grocery store company, for $24.6 billion. If the merger happens, these companies would consolidate much of the industry. If the EDGE system were implemented in Kroger, it would spread to Tom Thumb, Safeway, Metro Market, and several other grocery chains.
In response to consumers’ outrage, Kroger has refuted the claims that they implemented AI to price gouge consumers. Instead, they claim that over time, this system will help lower prices of goods for consumers and that doing so leads to more revenue for the company. Unsatisfied with Kroger’s rebuttal, Senators Elizabeth Warren and Bob Casey are launching an investigation to determine the legality of Kroger’s new technology. Their findings will set a precedent for how companies are allowed to use AI.
Works Cited
Tombly. “Kroger’s Controversial AI Pricing.” Perplexity AI, 2024, www.perplexity.ai/page/kroger-s-controversial-ai-pric-yYXqe_z4SkOZq62JYBnVUQ. Accessed 8 Nov. 2024.
Lino, Giro. “Kroger’s AI Pricing: Revolution or Controversy in Grocery Shopping?” Giro’s Newsletter, Giro’s Newsletter, 14 Aug. 2024, www.girolino.com/krogers-controversial-ai-pricing-the-future-of-grocery-shopping-or-unfair-practice/. Accessed 26 Nov. 2024.
Peyton Bigora. “Kroger Comes under Fire for Use of Electronic Shelf Labels.” Grocery Dive, 12 Aug. 2024, www.grocerydive.com/news/kroger-electronic-shelf-labels-instore-technology-senators-inflation/723939/. Accessed 26 Nov. 2024.