The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies. This inquiry involves eight firms across various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These companies received requests from the FTC seeking information about the implications of their pricing practices on privacy, competition, and consumer protection.
These businesses utilize data-driven tools like artificial intelligence to implement a strategy referred to as “surveillance pricing,” also known as “dynamic pricing.” This approach allows them to present different prices for the same products to consumers based on various factors, such as their demographic information, location, credit history, and online shopping behaviors.
Many of the firms under FTC scrutiny provide transaction, sales, and pricing solutions to some of the largest corporations in the U.S. and worldwide. Task, for instance, manages transactions for significant players in the hospitality sector, including McDonald’s and Starbucks, while Revionics offers pricing analytics and optimization software to major retail chains like Home Depot. Pros, which specializes in AI-powered pricing solutions, counts major names such as Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to clarify this “opaque market” that categorizes consumers and sets targeted prices for various goods and services. According to FTC Chair Lina Khan, “Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices. 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 agency is seeking information on four main aspects: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these surveillance practices on the prices consumers ultimately pay.