The Federal Trade Commission (FTC) has initiated an investigation involving several prominent companies concerning their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
The inquiry targets eight companies from various sectors: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory agency issued orders on Tuesday seeking details on how these pricing practices may affect privacy, competition, and consumer protections.
Many of the involved firms utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” which enable them to present varying prices for the same products to different consumers based on their individual characteristics or behaviors. Factors influencing these price variations include geographic location, demographic data, credit history, and online shopping habits.
The companies under scrutiny play significant roles in providing transaction, sales, and pricing services to some of the largest businesses in the United States and worldwide. For instance, Task Software manages transactions for major hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for prominent chains, including Home Depot. Meanwhile, Pros, which claims to offer AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” which categorizes consumers and establishes targeted pricing for various products and services.
“Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices,” stated FTC Chair Lina Khan. “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.”
In particular, the FTC is seeking information in four main areas: the specific surveillance pricing products and services offered by each company; data collection methods; customer and sales information; and the implications of these practices on the prices consumers ultimately pay.