Maryland Doesn't Need to Stop Dynamic Pricing

Developments in artificial intelligence continue to raise alarm among the public and lawmakers. Among the many concerns cited about artificial intelligence and automation is dynamic pricing. To this end, Maryland Governor Wes Moore signed legislation last week banning grocery stores and third-party delivery services from using individual shopper data to increase prices "dynamically."

Under dynamic pricing, sellers may use data about shopping behavior to automate and continuously adjust their prices. Under individualized dynamic pricing – sometimes called surveillance pricing in pejorative terms – businesses set different prices for different consumers by charging more to shoppers who appear willing to pay a premium or offering lower prices to customers who might not otherwise buy. Other types of dynamic pricing may include shifting prices at different times of day based on changes in demand or competitive conditions.

The underlying logic of dynamic pricing is straightforward: businesses have always tried to match price to demand, and data-driven tools make doing so easier.

Maryland’s bill drew public support, reflecting broader concern with companies exploring individualized pricing, especially on food and housing as basic needs. Critics frame these practices as predatory: corporations using shadowy algorithms to target and extract as much money as possible from individual shoppers.

However, the alarm reflects a misconception regarding what data collection and algorithmic pricing can actually accomplish. Even the most sophisticated artificial intelligence uses incomplete information and thus imperfect predictions – the same reason why centrally planned economies with government-dictated prices are so inefficient. Consumer preferences change with income, season, family circumstances, competing options, and other infinite variables that are impossible to capture in a dataset. The premise that an algorithm can reliably identify each shopper's maximum willingness to pay overstates the role that data and algorithms play in society.

Dynamic pricing is also already a routine feature of commerce. Airlines adjust fares continuously based on demand, booking patterns, and seat availability. That's why the person sitting next to you on a plane likely paid a different price than you paid for her ticket. Bars and restaurants offer happy hour pricing. Retailers run flash sales, time-limited promotions, and personalized discounts. Even Maryland’s own law acknowledges this reality with its numerous exemptions and clarifications for longstanding practices – promotional pricing, loyalty program discounts, and other temporary price reductions.

Moreover, the alarm over dynamic prices overlooks the consumer benefits. A grocer or other business that makes more sales has more room to keep overall prices low, and dynamic individualized prices can be what closes a sale that otherwise would not have happened. This means that people can buy things that otherwise wouldn’t have fit in their budgets.

Maryland’s law purports to address a public concern by conflating a common business practice with a supposedly harmful predatory practice and without acknowledging the consumer benefits. Maryland should indeed tackle deceptive trade practices in grocery stores and elsewhere, but states should not ban technology before actual harms to consumers materialize. Regulating against possible harms has its consequences – shoppers forgo benefits that they never even see.

NO FAKES Act to Combat "Deepfakes" is Reintroduced in Congress

On April 11, the "Nurture Originals, Foster Art, and Keep Entertainment Safe Act of 2025" or "NO FAKES Act" was re-introduced in the U.S. House of Representatives (H.R. 2794) and Senate (S. 1367). The House bill is sponsored by Rep. Maria Elvira Salazar and the Senate bill is sponsored by Sen. Christopher Coons. The NO FAKES Act would bolster individuals' intellectual property rights in their likenesses and voices by recognizing a private right of action against unauthorized and harmful "deepfakes." The bill has bipartisan backing as well as the endorsement of a cross-section of the creative and tech industries. The NO FAKES Act is strong on the merits and the 119th Congress should give it due consideration. 

 

Although generative AI technologies offer potential benefits, they also may be abused. Public displays and dissemination of "deepfake" songs misappropriate the value of recording artists’ voices, damaging the artists economically. Also, generative artificial intelligence (AI) tools and services on the Internet allow users to create "deepfake" explicit pictures and videos of individuals.

 

The NO FAKES Act would address those "deepfake" dangers in a targeted way by establishing a national uniform baseline of legal protection for an individual’s likeness and voice from unauthorized digital replicas. If passed by the 119th Congress and signed into law by President Donald Trump, the Act would make civilly liable anyone who knowingly produces a digital replica without the consent of the rights owner. It also would make civilly liable anyone who knowingly publishes, reproduces, displays, distributes, transmits, or makes the digital replica available to the public without the rights owner's consent. Persons harmed under the Act would have a right to seek statutory or actual damages, recovery of costs and attorneys’ fees, and injunctive relief. 

 

Recognizing the potential benefits of authorized digital replicas, the NO FAKES Act provides that individuals would have the right to license their personas for digital replication by third parties. Additionally, the Act is carefully written to address abuses and it includes safeguards for First Amendment-protected free speech and expression using generative AI tech. It bears emphasis that the NO FAKES Act is about private law – personal rights and intellectual property rights; it is not a federal criminal law bill.

 

A more detailed review of the same bill, previously introduced in the 118th Congress, is provided in my August 2024 Perspectives from FSF Scholars, "The 'NO FAKES Act' Would Protect Americans' Rights Against Harmful Digital Replicas."

Will AI Help or Hinder Federal Privacy Legislative Efforts?

Efforts to pass a federal data privacy law have dragged on for many years. During that time, unrelenting technological advancement simultaneously has produced new innovations that amplify calls for clear rules and complicated congressional conversations that might lead to such legislation. Artificial Intelligence (AI) is the latest such instigator/troublemaker.

Generative AI offerings – such as OpenAI's ChatGPT, Google's Gemini, and Meta AI – depend upon Large Language Models (LLMs) trained on massive amounts of data. The more data used to train the LLM, the better the results. Consequently, generative AI raises substantial questions relating to privacy. (By way of example, the image below was created with OpenAI's DALL-E using the prompt "create an image of generative AI and data privacy.")

In her Opening Statement regarding a recent Senate Commerce, Science and Transportation Committee hearing titled "The Need to Protect Americans' Privacy and the AI Accelerant," Chair Maria Cantwell (D-WA) wrote that "[w]e are being surveilled … tracked online in the real world, through connected devices. And now, when you add AI, it is like putting fuel on a campfire in the middle of a windstorm." AI, she argued, "increases the need for passing legislation soon."

This heightened concern, however, to date has not generated legislative progress on data privacy. The American Privacy Rights Act of 2024, about which I wrote in "Congressional Leaders Return Privacy to the Front Burner," an April 2024 Perspectives from FSF Scholars, has yet to advance beyond a discussion draft. It was scheduled for markup by the House Energy and Commerce Committee on June 27, 2024, but that markup was cancelled at the last minute, a development I described in a post to the Free State Foundation's blog.

Prompting an unsettling sense of déjà vu, already one state has taken stalled congressional matters into its own hands. On May 17, 2024, Colorado Governor Jared Polis signed into law Senate Bill 24-205, "Concerning Consumer Protections in Interactions with Artificial Intelligence Systems."

Broadly speaking, Senate Bill 24-205, which goes into effect on February 1, 2026, requires that developers of "high-risk" AI systems "use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination."

We shall see if other states follow Colorado's lead – and, if so, whether another unwanted privacy-related "patchwork" emerges.

Copyright and AI

Both real-world advances and outright speculations about artificial intelligence (AI) technologies have prompted scholars, policymakers, and others to ponder the implications of AI for copyright law and policy. The Copyright Office is hosting a symposium on "Copyright in the Age of Artificial Intelligence" on February 5 at the Library of Congress. And in 2019, the U.S. Patent and Trademark Office requested public comments on the impact of AI on copyrights and other forms of intellectual property (IP). Among the comments filed in response to the USPTO's request, the Motion Picture Association (MPA) offered a common sense take on the durability of basic copyright principles and the importance of maintaining clear rules regarding ownership and liability for infringement.

We may have more to say on AI and copyright the future. However, Free State Foundation President Randolph May and I have made the case – in Perspectives from FSF Scholars papers published in September 2019 and here in January 2020 – that copyright infringement is a strict liability tort and that an online platform provider's use of an automatic process in causing an infringement does not shield such providers from liability.