The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
Eight firms spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, have been issued requests from the regulatory agency for information about the implications of these pricing approaches on privacy, competition, and consumer protection.
These companies utilize data analytics and AI in a practice often referred to as “surveillance pricing” or “dynamic pricing,” whereby different prices are presented to different consumers for the same goods based on individual characteristics or behaviors, such as location, demographics, credit history, and shopping habits.
Many of the firms under investigation provide crucial transaction, sales, and pricing services to major corporations both in the United States and internationally. Notably, Task Software manages transactions for several large hospitality brands, including McDonald’s and Starbucks. Revionics specializes in retail price optimization software for global chains like Home Depot, while Pros markets itself as an AI-driven pricing solution provider, serving clients such as Nestlé, HP, and United Airlines, and also collaborates with Microsoft for technology development.
The FTC aims to explore the “opaque market” that categorizes consumers and establishes targeted pricing for products and services. FTC Chair Lina Khan emphasized the potential risks associated with companies collecting vast amounts of personal data, suggesting that such practices could be used to impose higher charges on consumers. She stated, “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 in four main areas: the types of surveillance pricing offerings by each company, the methods of data collection, customer and sales data, and the impact of these practices on final consumer pricing.