The Federal Trade Commission (FTC) has initiated an investigation into several major companies concerning their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
The investigation includes eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these companies, seeking details on how their pricing practices affect privacy, competition, and consumer protection.
Companies utilize advanced data tools, including artificial intelligence, in a practice referred to as “surveillance pricing” or “dynamic pricing.” This approach allows them to present varying prices for the same products based on individual consumer factors such as location, demographics, credit history, and shopping behavior.
Many of the businesses under scrutiny provide essential transaction, sales, and pricing services to prominent companies both in the U.S. and internationally. For instance, Task Software manages transactions for major hospitality chains like McDonald’s and Starbucks, while Revionics specializes in retail price optimization software for various global retailers, including Home Depot. Pros, known for its AI-driven pricing solutions, serves well-known clients like Nestlé, HP, and United Airlines, and works as a technology development partner for Microsoft.
The FTC aims to explore this “opaque market,” where consumer categorization is used to set targeted prices for goods and services. FTC Chair Lina Khan emphasized the potential privacy risks associated with the collection of personal data by these firms, stating, “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 regulatory agency is focusing on four main areas of investigation: the types of surveillance pricing products and services each company provides, their data collection methods, relevant customer and sales information, and the influence of these pricing strategies on the final prices paid by consumers.