The Federal Trade Commission (FTC) has initiated an investigation targeting several major companies regarding their utilization of customer data, algorithms, and artificial intelligence to customize pricing strategies.
The investigation, which involves eight firms including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, was announced on Tuesday. The FTC aims to gather information on how these pricing practices impact privacy, competition, and consumer protection.
These companies employ a method known as “surveillance pricing,” also referred to as dynamic pricing, which allows them to display varying prices for the same products based on consumers’ specific characteristics and behaviors. Factors influencing these personalized pricing strategies can include location, demographics, credit history, along with browsing and shopping habits.
Many of the firms under investigation provide pricing, transaction, and sales services to significant corporations both in the U.S. and globally. Task Software is known for its transaction management services for large hospitality chains, including McDonald’s and Starbucks. Revionics offers pricing analytics and retail price optimization to major retailers like Home Depot, while Pros, which provides AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC seeks to clarify the dynamics of this “opaque market,” which classifies consumers and establishes targeted pricing for products and services. FTC Chair Lina Khan emphasized the concerns surrounding privacy, stating that companies leveraging extensive personal data may exploit this information to impose higher prices on consumers. The inquiry aims to uncover the practices surrounding surveillance pricing, providing transparency into the systems employed by pricing intermediaries.
The agency is particularly interested in four areas: the types of surveillance pricing products and services offered by each company, the data collection methods used, customer and sales data, and the influence of these surveillance strategies on final pricing for customers.