The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices in utilizing customer data, algorithms, and artificial intelligence to customize pricing strategies.
A total of eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been ordered by the FTC to provide details on how these pricing methods affect privacy, competition, and consumer protection.
These companies employ technology, particularly AI, in a practice often referred to as “surveillance pricing” or “dynamic pricing.” This method enables them to present varying prices to different consumers for the same products based on factors such as location, demographics, credit history, as well as online browsing and shopping behavior.
Many of the firms under scrutiny by the FTC offer transaction, sales, and pricing services to some of the largest corporations both in the U.S. and internationally. Task Software, for instance, manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics offers pricing optimization tools to global retailers, including Home Depot. Pros, which promotes its AI-powered pricing solutions, has clients that include Nestlé, HP, and United Airlines and also collaborates with Microsoft on technology development.
In its investigation, the FTC aims to clarify the practices within this “opaque market” that categorizes consumers and assigns targeted prices for products and services. According to FTC Chair Lina Khan, the exploitation of personal data by firms poses a risk to privacy, and there are concerns that this data may be used to impose higher prices on individuals. The agency’s inquiry seeks to shine a light on this “shadowy ecosystem” of pricing intermediaries.
The FTC has outlined four primary areas of focus for the investigation: the types of surveillance pricing products and services offered by each company; their data collection methods; the availability of customer and sales data; and the impact of these surveillance practices on consumer pricing outcomes.