Online consumers at risk from ‘intelligent’ price manipulation: Oxford and Imperial experts

4 May 2023

Sophisticated computer algorithms used to set prices in online marketplaces put consumers at risk of collusion among sellers, according to a study today from computer scientists at the Oxford Internet Institute and Imperial College.

Widespread use of intelligent algorithmics and dynamic pricing by online retailers, puts the public at risk of ‘adversarial collusion’, maintains Dr Luc Rocher, lead author of the paper, ‘Adversarial Competition and Collusion in Algorithmic Markets’.

Published in the journal Nature Machine Intelligence, the research explains the risks from ‘adversarial collusion’, an anti-competitive practice whereby one dominant firm can manipulate other sellers which have weaker pricing algorithms.

Co-authored by Imperial’s Dr Arnaud J. Tournier and Professor Yves-Alexandre de Montjoye, the research highlights how such ‘adversarial collusion’ can have negative consequences for consumers, enabling participating firms to coordinate their prices and potentially increase their profits at the expense of consumers.

Dr Rocher says, ‘Online commerce is increasingly dominated by digital marketplaces. Facilitated by digital technologies, retailers now compete globally on these platforms. To keep up with the competition, sellers use sophisticated algorithms to set prices and respond in real time to competitors’ prices.’

He continues, ‘Our research highlights how intelligent machine learning algorithms could find vulnerabilities in the system. More sophisticated algorithms can manipulate weaker algorithms and therefore collude together to increase prices for everyone.’

Professor de Montjoye, senior author, adds, ‘Adversarial collusion raises new regulatory and enforcement questions. Our results emphasise the need for regulatory agencies in the UK, US, and European Union to consider how adversarial algorithmic pricing mechanisms could subtly undermine the competitiveness of online markets and harm consumers.

‘We believe further study is needed with academics and policymakers working together to try to address these important issues for the wider benefit of society.’

The researchers call for policymakers and regulatory agencies to consider adversarial manipulations of algorithmic pricing and suggest such collusion might fall outside of the scope of current competition laws or enforcement priorities.

Notes for editors:

The full article is ‘Adversarial Competition and Collusion in Algorithmic Markets’, Luc Rocher, Arnaud J. Tournier and Yves-Alexandre de Montjoye, published in the journal Nature Machine Intelligence.

Media Contact
For more information and embargoed copies of the research, please contact: Sara Spinks/Rosalind Pacey, Media and Communications Manager, Oxford Internet Institute 01865 287237 or [email protected].

Gemma Ralton, Communications Officer, Data Science Institute, Imperial College London, [email protected] or [email protected]

About the OII
The Oxford Internet Institute (OII) is a multidisciplinary research and teaching department of the University of Oxford, dedicated to the social science of the Internet. Drawing from many different disciplines, the OII works to understand how individual and collective behaviour online shapes our social, economic and political world. Since its founding in 2001, research from the OII has had a significant impact on policy debate, formulation and implementation around the globe, as well as a secondary impact on people’s wellbeing, safety and understanding. Drawing on many different disciplines, the OII takes a combined approach to tackling society’s big questions, with the aim of positively shaping the development of the digital world for the public good. https://www.oii.ox.ac.uk/

About Imperial College London’s Data Science Institute
The Data Science Institute (DSI) at Imperial College London is dedicated to advancing research and building community in the exciting interdisciplinary field of data science, the integrative fusion of mathematics, statistics, and computer science applied to address basic and practical problems in the sciences (natural, life, and social), engineering, and society writ broadly. The DSI was founded as one of the seven Global Institutes of Imperial College London and hosts researchers and students conducting their own academic research on a range of topics in areas such as biomedical informatics, data learning, data visualisation and computational privacy. The unifying theme of the research at the DSI is the pursuit of innovations for building, exploring, and exploiting modern data sets—that is, large data sets created from disparate sources and types of data through novel curation, transformation, machine learning techniques, and theoretical and practical insights from problem domains.

About the University of Oxford
Oxford University has been placed number one in the Times Higher Education World University Rankings for the seventh year running, and number two in the QS World Rankings 2022. At the heart of this success are the twin-pillars of our ground-breaking research and innovation and our distinctive educational offer.
Oxford is world-famous for research and teaching excellence and home to some of the most talented people from across the globe. Our work helps the lives of millions, solving real-world problems through a huge network of partnerships and collaborations. The breadth and interdisciplinary nature of our research alongside our personalised approach to teaching sparks imaginative and inventive insights and solutions.