The Federal Trade Commission (FTC) has initiated an investigation involving several prominent companies regarding their practices of using customer data, algorithms, and artificial intelligence to customize pricing strategies.
Eight companies are at the center of this inquiry: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. On Tuesday, these firms were served with orders seeking insights into how their pricing strategies impact privacy, competition, and consumer protection.
These companies utilize data-driven techniques, often referred to as “surveillance pricing” or “dynamic pricing,” to present varying prices to consumers based on their individual attributes or behaviors. Factors influencing these prices can include location, demographics, credit history, and historical browsing or purchasing behavior.
Many of the businesses being investigated are key players in transaction, sales, and pricing services for major firms both in the U.S. and internationally. Task Software provides transaction management services for notable hospitality brands like McDonald’s and Starbucks. Revionics is known for its retail price optimization software used by global retailers such as Home Depot. Additionally, Pros offers AI-based solutions for pricing and counts major corporations like Nestlé, HP, and United Airlines among its clientele. Pros also collaborates with Microsoft in technology development.
The FTC aims to clarify the complexities of this “opaque market,” which differentiates consumers and applies targeted pricing for 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; relevant customer and sales information; and the impact of these surveillance practices on the prices consumers ultimately pay.