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Competition regulator cracking down on companies that abuse big data

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The competition watchdog is launching a review into companies that use artificial intelligence (AI) to target vulnerable customers who can be manipulated into spending more money.

Business Secretary Greg Clark said he had asked Andrew Tyrie, the head of the Competition and Markets Authority, to advise him on regulatory changes to tackle the problem.

He said that there were already signs that companies had used personal data to exploit customers by, for example, targeting the elderly or those who fail to shop around.

Energy groups were signalled out as one group that effectively applied a “loyalty penalty” to faithful customers.

Other examples include splitting up families on flights if they fail to pay extra to book seating next to one another or loyal energy consumers who are charged more if they do not switch supplier regularly.

Citizens Advice estimated that the tactics may generate around £4bn a year.

The Business Secretary told the Financial Times: “There are growing concerns in this country and elsewhere that in our modern economy, while some may be prospering, others are losing out.”

While the digital revolution offered “greater choice and competition”, there was concern that those who are “less sophisticated” online could be “left behind”.

Clark said he had asked Lord Tyrie to “give further thought to how to address this problem, which may include further and possibly far-reaching legislative and institutional reform”.

Clark said: “I want to address these new challenges in a way that makes us the best place to develop these new technologies because we have a regulatory system that has already thought about the unintended consequences.”

The Competition and Markets Authority has done “a lot of thinking” about how to reform Britain’s regulatory regime according to Lord Tyrie.

“The most effective competition bodies will be those that respond to the rapid growth in these new markets,” he said.

In June, retail experts predicted that using AI to interact with customers and predict their wants and needs will become a mainstay of consumer-driven businesses in the near future. 

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