An Analysis Of The Abuse Of Dominance Using Artificial Intelligence (Ai) On Price Discrimination From A Legal Perspective

Abstract

With the rise of artificial intelligence in commercial markets, companies have increasingly adopted algorithm tools for price optimization, including personalized pricing. While such practices may yield efficiency gains and consumer benefits, they also raise significant concerns under competition law, especially in the context of abuse of dominance.

In digital markets, concentrated Big Data and analytical algorithms enable undertakings to predict each consumer’s willingness to pay with increasing accuracy and offer consumers personalized recommendations and tailored prices accordingly. In this context, concerns have arisen about whether and when AI-enabled price discrimination amounts to an abuse of dominance under competition law and would require a legal response. To address these concerns, this paper will analyze AI-enabled price discrimination from a comparative law and economics perspective. In economics, price discrimination is not always undesirable as it can increase static efficiency, and, on some occasions, it can promote dynamic efficiency and boost consumer welfare. Nevertheless, it may also lead to exclusionary and exploitative effects, especially once Tech Giants abuse their dominant positions in relevant markets. The development of Artificial Intelligence and the growing use of algorithms to optimize prices have generated significant debate about their benefits and potential adverse effects on competition and consumers. Two key issues dominate this discussion: algorithmic price discrimination through personalized pricing and algorithmic tacit collusion. While the risks and opportunities of algorithmic tacit collusion have been extensively studied, the potential harm from algorithmic price discrimination remains underexplored. This article examines whether the current competition law framework is adequate to tackle algorithmic price discrimination that harms consumers.