The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
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The FTC has issued information requests to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. This inquiry focuses on how these companies’ pricing practices may affect privacy, competition, and consumer protection.
These companies utilize tools like artificial intelligence to implement a pricing strategy known as “surveillance pricing” or “dynamic pricing,” which presents different prices to consumers for the same products based on individual characteristics or behaviors. Factors influencing these tailored prices may include location, demographics, credit history, and shopping habits.
Many of the firms approached by the FTC are involved in transaction, sales, and pricing services for major corporations both in the U.S. and internationally. Task Software manages transactions for various large hospitality companies, including McDonald’s and Starbucks, while Revionics offers pricing analytics to significant retailers like Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft in technology development.
The FTC aims to investigate the complexities of what it describes as an “opaque market” where consumer categorization leads to targeted pricing schemes.
According to FTC Chair Lina Khan, “Companies that collect personal data from Americans may put individuals’ privacy at risk. There is a concern that these companies could be exploiting vast amounts of personal information to set higher prices.” She emphasized that Americans should be informed if businesses are leveraging detailed consumer data for surveillance pricing, and the FTC’s inquiry intends to clarify this unclear landscape of pricing intermediaries.
The FTC is seeking information on four main areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales data, and the effect of these surveillance strategies on consumer pricing.