The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing for individual consumers. The inquiry targets eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking details on how these pricing strategies impact privacy, competition, and consumer protection.
These companies utilize data-driven techniques, commonly referred to as “surveillance pricing” or “dynamic pricing,” which allow them to present different prices for the same products to various consumers based on their individual characteristics and behaviors. Factors influencing pricing decisions may include a consumer’s location, demographic details, credit history, and online shopping record.
Many of the firms involved provide crucial transaction, sales, and pricing services to some of the largest businesses both in the U.S. and around the world. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization tools to global chains, including Home Depot. Pros, a tech company specializing in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its notable clients and partners with Microsoft for technology development.
The FTC aims to explore this “opaque market” that involves categorizing consumers and setting targeted prices for various products and services. FTC Chair Lina Khan emphasized the importance of this inquiry, stating, “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 agency is investigating four main areas: the surveillance pricing products and services offered by each company, methods of data collection, customer and sales data, and the impact of these practices on the prices consumers ultimately pay.