The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing. The inquiry targets eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, which were ordered to provide information regarding the implications of such pricing methods on privacy, competition, and consumer protection.
These companies utilize data-driven tools, commonly known as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices for identical products based on individual consumer characteristics or behaviors. Factors considered can include geographic location, demographic information, credit history, as well as browsing and purchase histories.
Many of the companies under investigation offer transaction, sales, and pricing services to some of the largest businesses in the United States and worldwide. For example, Task Software plays a crucial role in transaction management for major hospitality brands, including McDonald’s and Starbucks. Revionics delivers retail price optimization software to global chains like Home Depot, and Pros, a provider of AI-driven pricing solutions, has clients such as Nestlé, HP, and United Airlines, while also partnering with Microsoft in technology development.
The FTC aims to unravel the complexities of this “opaque market,” which categorizes consumers and sets tailored prices. FTC Chair Lina Khan emphasized the risks posed to consumer privacy by companies extracting personal data. She noted, “Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
The agency is particularly focused on gathering information in four critical areas: the types of surveillance pricing products and services offered by each firm, their data collection methods, customer and sales data, and the overall impact of these practices on consumer pricing outcomes.