The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
The inquiry involves eight firms from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders requesting information about the implications of these pricing methods on privacy, competition, and consumer protection.
Utilizing data tools such as artificial intelligence, companies practice “surveillance pricing” or “dynamic pricing,” which allows them to display different prices for the same products to various consumers based on characteristics like location, demographics, credit history, and browsing or shopping habits.
Many of the firms under scrutiny provide essential transaction, sales, and pricing services to significant U.S. and global businesses. Task Software supports major hospitality brands, such as McDonald’s and Starbucks, while Revionics offers pricing optimization software to various global retailers, including Home Depot. Pros, an AI-focused software company, serves notable clients, including Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to investigate this “opaque market” that categorizes consumers and sets targeted prices for various goods and services. FTC Chair Lina Khan stated, “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 FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the influence of these practices on the pricing consumers ultimately pay.