Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Grocery Wars

Walmart’s AI Customer Surveillance raises Ethical Questions

Walmart’s AI customer surveillance is beginning, and it raises a host of ethical questions.

To explain, artificial intelligence (AI) and algorithms use video cameras to identify patterns of customer behavior at a Long Island Walmart Neighborhood Market. TechCrunch reports Walmart (NYSE: WMT) calls the store the Intelligent Retail Lab (IRL).

Thus shoppers pay to participate in Walmart’s behavioral sciences experiment. TechCrunch claims Walmart’s AI is not recording what customers buy. However, the AI can discern many customer behaviors.

Instead, the AI will tell Walmart associates what foods they need to restock. In addition Walmart will test other technologies at the Levittown, New York Store. Tellingly, the Intelligent Retail Lab is one of several experiments, Walmart’s AI think-tank/incubator; Store No 8, operates.

Walmart Gathers Customer Data

On the other hand, Walmart is collecting a vast amount of data about customers. In fact, TechCrunch claims computers at the IRL can store 1.6 terabytes, or 1.6 million bytes of data on consumer behavior.

Unfortunately, we do not know what data Walmart is collecting and that raises ethical concerns. However, Store No 8 is using the data to build a virtual shopping platform they call Spatials.

For example, are the AI sorting customers by age, sex, race, dress, etc? Such a categorization could lead to charges of racism and other forms of discrimination.

Moreover, Walmart could direct AI to examine people’s clothing, or watch for children. To explain, well-dressed customers; and people with children, could buy more.

Finally, an AI could direct security to drive certain groups out of the store. The homeless, or young black men, for instance. Obviously, that activity will lead to lawsuits.

Will Walmart Sell Customer Data?

An even greater dilemma will occur if Walmart sells consumer data.

For instance, Walmart could sell data about shoppers in the laundry aisle to Procter & Gamble (NYSE: PG). Then Procter & Gamble could analyze the behavior of customers that do not buy Tide.

Walmart could sell customer data; or share it with suppliers, because of the potential value. For instance, Wibson estimates the average individual’s personal data is worth $240 a year or more.

Thus, I cannot imagine retailers like Walmart turning down a potential source of revenue like consumer behavioral data. In addition, I can imagine attorneys suing to get their cut of that revenue with class actions lawsuit. Plus, governments will want to tax that revenue.

Who Owns Your Data?

Walmart’s AI data collection raises the issues of data rights and data ownership.

For instance, who owns data about your shopping behavior; you or Walmart? Currently, Walmart claims ownership but there is a growing school of thought that the data belongs to individuals.

Notably, the European Union’s General Data Protection Regulation (GDPR) is the first legal effort to control corporate data use. I have a feeling it will not be the last. US law is less clear, but I think attorneys will soon argue consumers’ own the data about their behavior. How the courts will rule on data ownership is unknown.

Will there be a market for consumer behavior data

In addition, there are blockchain startups; like Brave, and Harmony, that aim to protect your data by monetizing it.

These efforts hope to create a market for personal data through tokenization. For instance, the long-term goal at Brave is  to pay consumers for their data in the Basic Attention Token (BAT) ERC20 cryptocurrency.

The belief is that by making data quantifiable and valuable it will be easier to protect. Unfortunately, Brave and Harmony are focusing on online data but consumer behavior is their next frontier.

However, I suspect one of them will soon add behavioral data to its platform. On the other hand, behavior data platforms; like Brave, JET8, and Harmony, are still in development. In fact, Harmony is still on the drawing board. So its developers could integrate with brick and mortar retail.

Companies are already Harvesting your Data

Notably, companies are already harvesting consumers’ behavioral data. For instance, CBS reports carmakers are collecting and selling data about drivers. Moreover, Ford (NYSE: F) is building a Transportation Mobility Cloud to harvest drivers’ data.

Under these circumstances, consumer surveillance and data harvesting will increase. Therefore, we will soon see political and legal battles over consumer behavior data. In particular, consumers will demand data rights when they realize they can sell that data for money.