The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Mars, the maker of M&M’s, is set to acquire Kellanova, the producer of Pop-Tarts, in one of the year’s largest transactions.
The FTC has issued orders to eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information about how this pricing strategy affects privacy, competition, and consumer protection.
These companies utilize data-driven tools, often termed “surveillance pricing” or “dynamic pricing,” which allow them to display varying prices to consumers for identical products based on individual characteristics or behaviors. Factors can include a user’s location, demographics, credit history, and past browsing or shopping habits.
Many of these firms provide transactional, sales, and pricing solutions to some of the largest corporations both in the U.S. and internationally. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks. Revionics delivers retail pricing optimization and analytics to major retailers, including Home Depot, while Pros offers AI-driven pricing solutions, serving clients such as Nestlé, HP, and United Airlines, and also collaborates with Microsoft.
The FTC aims to clarify the complexities of this “opaque market,” which categorizes consumers to establish targeted pricing for various products and services.
“Companies that collect personal data from Americans can jeopardize individuals’ privacy. There are concerns that these firms may be using personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand whether businesses are leveraging detailed consumer data for surveillance pricing, and this inquiry will illuminate the obscure landscape of pricing intermediaries.”
The FTC is particularly interested in four main aspects: the types of surveillance pricing products and services provided by each company, their data collection methods, the sales and customer information they possess, and the impact of these practices on the prices consumers ultimately pay.