FTC Launches Probe Into Big Tech’s Pricing Secrets: What You Need to Know

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The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence in their pricing strategies.

The inquiry involves eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has requested information about how these pricing methods affect privacy, competition, and consumer protection.

Companies are utilizing data tools, including AI, in a practice known as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on individual consumer characteristics and behaviors. Factors such as location, demographics, credit history, and browsing or shopping history can all influence pricing decisions.

Many of the firms contacted by the FTC offer transaction, sales, and pricing services to leading businesses in the United States and around the world. For example, Task Software handles transaction management for major hospitality brands like McDonald’s and Starbucks. Revionics provides retail price optimization software and analytics to numerous global chains, including Home Depot. Pros, described as an AI-driven pricing solutions provider, counts Nestlé, HP, and United Airlines among its clientele and is also partnered with Microsoft in technology development.

The FTC aims to uncover the complexities of this “opaque market,” which segments consumers and assigns targeted pricing for products and services.

“Businesses that collect personal data from Americans risk compromising their privacy. These companies might be using extensive personal data to charge higher prices,” stated FTC Chair Lina Khan. “Americans deserve transparency regarding how their detailed consumer data may lead to surveillance pricing, and this inquiry will bring to light the hidden networks of pricing middlemen.”

The FTC is seeking information in four main areas: the types of surveillance pricing products and services offered by each company, methods of data collection, customer and sales information, and the influence of these surveillance practices on consumer pricing.

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