The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to create personalized pricing strategies.
Notably, Berkshire Hathaway holds $234.6 billion in U.S. Treasury bills, exceeding the reserves of the Federal Reserve.
The regulatory body issued orders to eight companies — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — seeking information on how these pricing tactics affect privacy, market competition, and consumer protection.
These companies utilize data-driven methodologies, including AI, to implement what is known as “surveillance pricing” or “dynamic pricing,” which allows them to present varying prices for the same products based on individual consumer characteristics or behaviors. Factors influencing these price variations can include geographic location, demographic information, credit history, as well as browsing and shopping habits.
Many of the firms under scrutiny provide transaction, sales, and pricing solutions to major businesses in the U.S. and around the world. For instance, Task Software facilitates transaction management for leading hospitality chains such as McDonald’s and Starbucks, while Revionics offers retail price optimization software to global brands like Home Depot. Pros, claiming to deliver AI-driven pricing solutions, serves notable clients including Nestlé, HP, and United Airlines, and also collaborates with Microsoft on technology development.
The FTC aims to gain clarity on this “opaque market,” which identifies shoppers and adjusts pricing for various products and services accordingly.
“Companies that collect personal data from Americans pose a risk to individual privacy. They could potentially leverage this wealth of data to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand if businesses are utilizing detailed consumer information for surveillance pricing, and this inquiry will illuminate the complex network of pricing intermediaries.”
The FTC is particularly interested in four main areas: the types of surveillance pricing products and services available from each firm, their methods of data collection, customer and sales insights, and the impact these surveillance practices have on the prices customers ultimately pay.