The Federal Trade Commission (FTC) has initiated an investigation focusing on several major companies regarding their use of customer data, algorithms, and artificial intelligence to set individualized pricing.
The investigation targets eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has requested information on the implications of these pricing strategies for privacy, competition, and consumer protection.
Many of the firms involved in this inquiry utilize technology like AI for a practice referred to as “surveillance pricing,” also known as “dynamic pricing.” This approach features different prices for the same products based on consumer-specific factors such as location, demographics, credit history, and shopping patterns.
Among those contacted by the FTC, several companies offer transaction, sales, and pricing solutions to major corporations in the U.S. and worldwide. For instance, Task Software manages transactions for prominent hospitality brands like McDonald’s and Starbucks. Revionics delivers retail price optimization software to well-known chains, including Home Depot, while Pros provides AI-driven pricing solutions to clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market,” in which consumers are categorized to set targeted prices for products and services.
FTC Chair Lina Khan expressed concerns, stating, “Companies that collect Americans’ personal data may jeopardize their privacy. There’s a chance that businesses could exploit this vast amount of personal information to impose higher prices. Americans have the right to know whether detailed consumer data is being used for surveillance pricing, and our inquiry will illuminate this obscure system of pricing intermediaries.”
The FTC is specifically seeking information in four main areas: the types of surveillance pricing products and services each company provides; the methods of data collection; customer and sales information; and the impact of these practices on the prices paid by consumers.