The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
The agency has sent information requests to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The purpose of this inquiry is to assess the implications of these pricing practices on privacy, competition, and consumer protection.
These companies utilize data-driven tools like AI in a method referred to as “surveillance pricing,” also known as “dynamic pricing.” This approach allows businesses to display varying prices for the same products to different consumers based on factors such as location, demographics, credit history, and browsing or shopping habits.
Many firms targeted in the FTC’s investigation provide transaction, sales, and pricing services to major corporations both in the U.S. and internationally. Notably, Task Software manages transactions for many large hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software, serving global chains like Home Depot. Pros, which offers AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients, and collaborates with Microsoft on technology development.
The FTC aims to investigate the “opaque market” that characterizes consumer profiling and targeted pricing practices. FTC Chair Lina Khan emphasized the risks of privacy violations associated with the harvesting of personal data, stating that businesses might exploit this information to impose higher prices on consumers. She noted that Americans deserve transparency regarding the use of their data for surveillance pricing, and the FTC’s investigation will clarify the complex network of pricing intermediaries involved.
The agency is focusing on four main areas of concern: the types of surveillance pricing products and services offered by each company; their methods of data collection; customer and sales data; and the impact of these practices on the pricing faced by consumers.