Ryan Calo Discusses Market Manipulation and Dark Patterns

By TAP Staff Blogger

Posted on June 3, 2021


“There are any number of examples where you believe you're giving up information, or you don't know you're giving up information, and that information is later used to exploit. And that's a pretty obvious privacy harm.”
- Ryan Calo testifying at the FTC’s workshop, “Bringing Dark Patterns to Light”


If you’ve tried to unsubscribe from an email list or service, and the prominent button options are “receive emails once a week” or “receive fewer emails”, you’ve encountered a “dark pattern” on the web nicknamed obstruction. If you’ve tried to cancel a service that was easy to sign up for but find you have to go through several steps such as make a phone call within specified hours or send a letter via the postal service, this is another “dark pattern,” this one nicknamed, roach motel.


There are numerous tactics companies use online to manipulate the customers for the companies’ benefit. It might be to upsell products, gather customer personal information, or keep a customer on a mailing list.


The Federal Trade Commission (FTC) recently examined these practices in an online workshop to learn what dark patterns are and how they affect consumers and the marketplace. During the “Bringing Dark Patterns to Light” workshop, Professor Ryan Calo, University of Washington Law School, shared his research into digital market manipulation. ("Digital Market Manipulation" is one of Professor Calo’s papers that he discussed during the workshop.)


Below are a few takeaways from Professor Calo’s testimony at the FTC’s workshop on “Bringing Dark Patterns to Light”:


Manipulating the Environment to Change Behavior


The idea that you can manipulate an environment to channel behavior has a long pedigree. We think about an example from the 1920s of the bridge that Robert Moses allegedly made to have a low clearance so that only wealthy people could get to the beach, because public transportation was difficult under a low bridge.


Another great example that's less often talked about is the hotel keys in Europe, why they're so unbelievably bulky and heavy. Clerks in hotels got so sick of people losing the keys that they made them heavy so that they had an incentive to leave them at the front desk.


Obviously, companies are aware that you can use these techniques in order to profit. One of my favorite examples [in grocery stores] is the idea that a sugary cereal would be about eye level for a toddler so that they'll nag you about it. Or in a casino, they hide the clocks so that people who are gambling are not aware of what time it is, and they don't check themselves.


When you move from a brick and mortar environment to a digital environment, there are more aspects of the environment to manipulate. I think, as importantly, you can also collect and leverage information about consumers.


Setting Prices Specific to the User and Their Circumstances


Imagine that you walk into a grocery store and you're greeted by somebody conducting a survey. You fill out the survey; it's all about how much you'd be willing to pay for this or that kind of product. By the time you get to that kind of product in the aisle, all of a sudden, the price has changed to your reservation price, the price in the survey you noted that would be the most you might be willing to pay. The price is literally what you said you would pay.


Another example is Uber, the ride-sharing company. Uber investigated whether perhaps you might be willing to pay more for surge pricing if your battery were very, very low, because you would fear that you wouldn't be able to get home. Now, they didn't deploy this. But what they did deploy was another interesting example, the idea being that when there's a lot of demand, the price is going to go up. Initially, Uber would make things be twice as much or three times as much.


What the digital environment allows is, it's the mediation of the consumer that permits a lot more of this kind of a pattern that we're talking about, we now call dark patterns, and which I call digital market manipulation.


Privacy Harms


Sometimes the privacy harm case is pretty straightforward. Sometimes it's more about how people feel like they're being taken advantage of, and they feel icky, subjectively. But remember my example about the grocery store where you walk in and someone gives you a survey? And purportedly, the survey is about figuring out whether they should carry this product. But then they go ahead and they use it against you later by charging you a higher price.


There are any number of examples where you believe you're giving up information, or you don't know you're giving up information, and that information is later used to exploit. And that's a pretty obvious privacy harm.


I think just our baseline assumption should be that the digital ecosystem, digital advertising is not the first multibillion dollar activity in human history that has no significant externalities. And as such, there needs to be much more assertive regulation, as we are beginning to see in the United States and have seen in Europe.


Dark Patterns and the FTC’s Role


I think that line drawing is a problem that we're going to encounter here. But it's also endemic to regulation and law, in general, and that the FTC, in that it polices against unfair and deceptive practice, is well positioned to identify certain practices as being unfair on the basis, for example, that they exploit vulnerability and inure exclusively to the benefit of the firm and not the consumer. In fact, one of my hopes is that dark patterns is a way for our society to begin to reclaim that almost moral notion of fairness.


100 years ago, that is what Congress told the FTC to do. Figure out which practices that companies are doing that are just too unfair to let go. They spoke in very overt, moralistic language about it. And so my hope is that dark patterns is a place where we can begin to reclaim that role for this great commission.


Video and transcript of the FTC’s workshop is available at “Bringing Dark Patterns to Light”.


Read More:


In his testimony, Professor Calo referred to his following papers:


Additionally, Professor Lior Strahilevitz, University of Chicago Law School, also testified at the FTC’s workshop on dark patterns. Read the TAP blog discussing his work on this techpolicy issue: “Lior Strahilevitz Shines a Light on Dark Patterns”.