The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their use of customer data, algorithms, and artificial intelligence to set individualized pricing. The inquiry involves eight firms: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, all of which were issued information requests regarding the implications of their pricing strategies on privacy, competition, and consumer protection.
These companies utilize advanced data tools, including AI, to employ a method referred to as “surveillance pricing” or “dynamic pricing,” which allows them to offer varying prices for the same products based on customer traits or behaviors such as location, demographics, credit history, and online shopping patterns.
Many of the firms under investigation provide transaction, sales, and pricing solutions to some of the largest corporations in the U.S. and worldwide. For instance, Task Software facilitates transaction management for major brands like McDonald’s and Starbucks, while Revionics specializes in retail price optimization for chains such as Home Depot. Additionally, Pros markets itself as an AI-driven pricing solutions provider, servicing prominent clients including Nestlé, HP, and United Airlines, and partnering with Microsoft for technology development.
The FTC aims to clarify the intricacies of an “opaque market” that sorts consumers and assigns targeted prices to goods and services. FTC Chair Lina Khan emphasized that businesses leveraging Americans’ personal data pose risks to individual privacy. “Firms could be exploiting this vast trove of personal information to charge people higher prices,” she stated. The inquiry seeks to illuminate the mechanisms behind surveillance pricing and how these practices affect customer pricing.
Information sought by the FTC covers four primary areas: the variety of surveillance pricing services each company offers, their data collection methods, sales and customer data, and the extent to which these surveillance practices affect final prices paid by consumers.