The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies concerning their usage of customer data, algorithms, and artificial intelligence to personalize pricing for consumers.
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The FTC issued orders to eight firms — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros — requesting detailed information about the effects of these pricing strategies on privacy, competition, and consumer protection.
Companies are utilizing data-driven tools, referred to as “surveillance pricing” or “dynamic pricing,” to offer different prices for the same products based on individual consumer traits and behaviors, including their location, demographics, credit history, and browsing patterns.
Many of the firms under scrutiny provide transaction, sales, and pricing services to some of the largest companies both in the U.S. and worldwide. Task Software manages transactions for several major hospitality brands, like McDonald’s and Starbucks. Revionics offers retail price optimization software and pricing analytics to global chains, including Home Depot. Pros, which claims to deliver AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft as a technology development partner.
The FTC aims to unravel what it describes as an “opaque market” that categorizes consumers and establishes targeted pricing strategies.
“Firms that harvest Americans’ personal data can put people’s privacy at risk. These firms might be exploiting vast amounts of personal information to set higher prices,” stated FTC Chair Lina Khan. “Americans deserve clarity on whether businesses are employing detailed consumer data for surveillance pricing, and the FTC’s inquiry seeks to illuminate this shadowy ecosystem of pricing intermediaries.”
The FTC is specifically interested in four main areas: the types of surveillance pricing products and services offered by each company; the methods of data collection; customer and sales information; and the influence of these surveillance practices on the prices consumers ultimately pay.