The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The FTC has issued requests for information to eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This inquiry aims to understand the potential implications of these pricing practices on privacy, competition, and consumer protection.
Companies are utilizing data tools, including AI, to implement what is known as “surveillance pricing” or “dynamic pricing.” This approach enables businesses to present different prices for identical products based on the individual characteristics or behaviors of consumers, which may include factors like location, demographics, credit history, and shopping habits.
Many of the firms contacted by the FTC are significant players in the transaction, sales, and pricing sectors both in the U.S. and worldwide. Task Software manages transactions for major hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization software and provides pricing analytics to various global retailers, including Home Depot. Pros, which promotes itself as an AI-driven pricing solution provider, services clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the functioning of this “opaque market,” which profiles shoppers and applies targeted pricing strategies. FTC Chair Lina Khan expressed concerns regarding the use of personal data, stating that it could lead to higher prices for consumers. She emphasized the public’s right to know whether businesses are leveraging consumer data for surveillance pricing, indicating that the agency’s investigation will illuminate this complex landscape of pricing intermediaries.
The FTC is seeking information on four main aspects: the types of surveillance pricing products and services each company offers, their data collection methods, relevant customer and sales data, and how these surveillance pricing techniques affect the final prices that customers pay.