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.
Mars, the well-known candy manufacturer, is set to acquire Kellanova, the company behind Pop-Tarts, marking one of the largest deals of the year.
The FTC has issued orders to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks to understand how these pricing practices impact privacy, competition, and consumer protection.
Companies are utilizing data tools through a practice often referred to as “surveillance pricing” or “dynamic pricing.” This involves presenting different prices for identical products based on factors such as a consumer’s location, demographics, credit history, and browsing or shopping habits.
Many of the firms contacted by the FTC provide pricing services and transaction solutions to major corporations in the U.S. and internationally. Task Software manages transactions for prominent hospitality chains such as McDonald’s and Starbucks. Revionics offers retail price optimization and pricing analytics to global retailers, including Home Depot. Pros, which promotes its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the “opaque market” that categorizes consumers and sets specific prices based on their profiles. FTC Chair Lina Khan emphasized that the harvesting of personal data could jeopardize individual privacy, warning that companies might exploit this information to impose higher prices. “Americans deserve to know whether businesses are utilizing detailed consumer data to implement surveillance pricing, and the FTC’s inquiry will illuminate this shadowy pricing ecosystem,” she stated.
The commission is focusing on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the influence of these practices on customer pricing.