The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, were ordered by the regulatory body to provide information on how these pricing practices impact privacy, competition, and consumer protection.
These businesses utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” to present varying prices for identical products based on individual customer characteristics and behaviors, such as location, demographics, credit history, and shopping habits.
Several of the firms under scrutiny play significant roles in transaction, sales, and pricing services for major corporations in the United States and worldwide. For instance, Task Software manages transactions for key hospitality brands, including McDonald’s and Starbucks. Revionics offers retail price optimization tools to international retailers, including Home Depot. The software provider Pros, which specializes in AI-driven pricing solutions, counts major companies like Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft as a technology development partner.
The FTC aims to investigate the “opaque market” that categorizes consumers and sets targeted prices for various products and services. FTC Chair Lina Khan emphasized the need for transparency, stating that companies collecting personal data could potentially compromise individuals’ privacy and exploit this information to impose higher prices. She said, “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.”
The FTC’s inquiry focuses on four main areas: the types of surveillance pricing products and services provided by each company, their data collection methods, customer and sales data, and how these surveillance practices affect the final prices consumers pay.