You can enable subtitles (captions) in the video player

For years, airlines, accommodation websites, and ride hailing apps have been adjusting their prices in real time, responding to periods of higher and lower demand. It’s known as dynamic or surge pricing, but powered by algorithms and artificial intelligence, surge pricing is now being used across a growing number of consumer industries, from theme parks to restaurants, retail outlets, and rock concerts.

In the retail industry, the practise is especially prevalent in online marketplaces. Amazon changes prices 2.5mn times a day across all its product lines, using millions of real time data points to benchmark against competitors and track demand surges. For sellers, dynamic pricing allows a product to have multiple price points, which can lead to increased revenues. A 2018 study by researchers at MIT found that dynamic pricing boosted airline revenues by between 1 per cent and 4 per cent.

One barrier to surge pricing for bricks and mortar retailers has been the time consuming task of physically changing in-store price labels, but the use of electronic labels is rising. In the US, for example, grocery giant Walmart plans to instal them in 2,300 stores by 2026. Its nearest rival, Kroger, began testing the tech in 2018 and has since expanded it to 500 stores across the country.

A 2023 report found that dynamic food pricing could increase supermarket gross margins by 3 per cent, but some are wary of the impact it could have on more essential goods like groceries. In August, two US senators announced they would be launching an investigation into Kroger’s digital price tags, due in part to concerns the technology will enable price gouging.

Even in non-essentials, dynamic pricing is coming under increased scrutiny. This September, ministers in the UK announced plans to probe its use for rock band Oasis’s concerts that saw ticket prices skyrocket. For regulators, another concern, across all industries, are the algorithms driving dynamic pricing. They often incorporate competitors’ prices, and there is mounting evidence that can encourage implicit collusion between firms, raising prices overall.

Surge pricing can also conceal price gouging in markets where there is fixed supply and little transparency. The promise of dynamic pricing is that it better matches supply and demand, producing greater economic efficiencies. But if companies want to use it more widely, their biggest battle may be convincing regulators and consumers that dynamic pricing isn’t just a more efficient way of increasing corporate profits.

TikTok-owner, ByteDance, says it has sacked an intern for “maliciously interfering” with the training of one of its artificial intelligence (AI) models.

But the firm rejected reports about the extent of the damage caused by the unnamed individual, saying they “contain some exaggerations and inaccuracies”.

BBC News has contacted ByteDance to request further details about the incident.

The Chinese technology giant’s Doubao ChatGPT-like generative AI model is the country’s most popular AI chatbot.

“The individual was an intern with the commercialisation technology team and has no experience with the AI Lab,” ByteDance said in a statement.

“Their social media profile and some media reports contain inaccuracies.”

Its commercial online operations, including its large language AI models, were unaffected by the intern’s actions, the company added.

ByteDance also denied reports that the incident caused more than $10m of damage by disrupting an AI training system made up of thousands of powerful graphics processing units (GPU).

Aside from firing the person in August, ByteDance said it had informed the intern’s university and industry bodies about the incident.

The social media giant has been investing heavily in AI technology, which it uses to power not only its Doubao chatbot but also many other applications, including a text-to-video tool called Jimeng.

I was delighted to catch sight of a headline that spoke of a “shot in the arm for active fund industry” (October 5). Could it be that active fund managers are finally showing that the application of highly rewarded brain power is paying off for those whose money they manage? Will the clients at long last have their yachts?

But no, plus ça change! It turns out after all that what the active fund industry is really, really good at is not the delivery of great value for its clients but relieving them of their wealth through extortionate fees. Bravo!

Andrew Mitchell
London W4, UK

Gillian Tett was, as ever, on the money when she wrote “Data centres alone won’t stop the AI energy squeeze” (Opinion, October 5). But beyond the need for joined-up thinking from the market and governments to increase energy supply, the article misses a faster and cheaper way to stop the energy squeeze caused by the growth in artificial intelligence — namely making data centres fundamentally more energy efficient.

Eric Schmidt, former Google CEO, noted that AI has an infinite appetite for energy, so increasing grid capacity is no doubt essential to realising AI’s full potential. However, AI moves faster than our ability to increase grid capacity. Increasing grid capacity requires enormous capital investment, governmental and regulatory change, and public approval — it is not a simple task, nor one achieved quickly.

Tett highlights the fact that market forces alone cannot solve this and notes the need for government to create connected grid capacity and adjudicate distribution of the limited energy supply fairly.

However, the article, and the wider debate, pays scant attention to the huge energy waste in data centres.

Take the network switch — the workhorse of every data centre, shuttling data packets between clusters of graphic processing units and central processing units. Network switches alone consume 20 per cent of a data centre’s total power requirement but state of the art technology now allows for that to be reduced to less than 1 per cent. Efficiency gains are waiting to be realised across every element of the data centre technology stack and should be prioritised.

Any increase in grid capacity must be twinned with making data centres more energy efficient and sustainable. Where technologies exist that use lower power and offer equal or better performance, these should be promoted and prioritised, by the industry — and yes, also by government through policy and regulation.

This can be achieved in part by earmarking a portion of the enormous capital slated to expand energy supply to support and incentivise the roll out of efficient data centre technologies. It can also be achieved by implementing regulation in the spirit of Germany’s recently passed Energy Efficiency Act which mandates power usage effectiveness levels for data centres, forcing owner and operators to build sustainably.

Market forces alone will not drive change — government support and incentives for data centre and AI companies to invest in technologies that enable energy-efficient, sustainable AI will be required.

Mark Rushworth
Chief Executive & Founder, Finchetto, Guildford, Surrey, UK