The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their practices surrounding the use of customer data, algorithms, and artificial intelligence to customize pricing for individuals.
In this context, Microsoft has shifted some blame towards Delta for a recent global IT outage.
The FTC has issued information requests to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, regarding the effects of their pricing strategies on privacy, competition, and consumer protection.
These companies utilize data-driven techniques, such as AI, in a practice often referred to as “surveillance pricing” or “dynamic pricing,” which allows them to offer different prices for the same products based on consumer attributes or behaviors. Factors affecting these prices may include a customer’s location, demographics, credit history, and previous shopping behavior.
Many of the firms involved in the FTC’s inquiry provide transaction, sales, and pricing services to some of the largest corporations both in the U.S. and worldwide. Task Software plays a significant role in the hospitality industry, serving major chains like McDonald’s and Starbucks. Revionics supplies retail price optimization software to various global brands, including Home Depot. Pros, which offers AI-powered pricing solutions, counts Nestlé, HP, and United Airlines among its clientele and collaborates with Microsoft on technology development.
The FTC aims to investigate what it describes as an “opaque market” that profiles consumers to implement targeted pricing strategies.
“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,” stated FTC Chair Lina Khan. “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 is seeking information on four primary aspects: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the impact of these surveillance practices on the final prices customers pay.