The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their practices related to customer data, algorithms, and artificial intelligence in the context of personalized pricing.
This week has been particularly tumultuous for Nvidia’s stock as the company navigates significant market challenges. The FTC issued orders to eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—seeking information about the implications of their pricing strategies on privacy, competition, and consumer protections.
Companies are utilizing data-driven tools, including artificial intelligence, to implement what is known as “surveillance pricing” or “dynamic pricing.” This approach results in the presentation of different prices to consumers for identical products, based on various factors such as location, demographic information, credit history, and online behaviors like browsing or shopping history.
Many of the firms under investigation play key roles in providing transaction, sales, and pricing services for some of the largest businesses in the U.S. and around the globe. For example, Task Software facilitates transaction management for significant hospitality chains like McDonald’s and Starbucks, while Revionics specializes in retail price optimization and supports clients like Home Depot. Pros, which offers AI-driven pricing solutions, has clients including Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to illuminate this “opaque market,” which enables the categorization of consumers and the establishment of targeted pricing for products and services. In a statement, FTC Chair Lina Khan emphasized the potential risks to privacy posed by companies collecting extensive personal data, suggesting that such practices may allow businesses to charge customers higher prices. Khan stated, “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’s investigation will focus on four critical areas: the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales information, and the influence of these practices on the prices consumers ultimately pay.