The Federal Trade Commission (FTC) has initiated an investigation into several major corporations regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
On Tuesday, the FTC issued requests for information to eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency aims to understand how these pricing practices affect privacy, market competition, and consumer protection.
These companies utilize data-driven tools, often referred to as “surveillance pricing” or “dynamic pricing,” which enable them to display varying prices for identical products based on consumer characteristics or behaviors. Factors influencing these pricing decisions may include a shopper’s location, demographics, credit history, and online browsing or shopping behaviors.
Many of the businesses being investigated offer transaction, sales, and pricing services to some of the largest firms in the United States and worldwide. Task Software, for instance, manages transactions for major hospitality brands such as McDonald’s and Starbucks, while Revionics supplies retail price optimization software to numerous global retailers, including Home Depot. Additionally, Pros, known for its AI-driven pricing solutions, serves clients like Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC’s investigation seeks to clarify the complexities of a market that categorizes consumers and sets targeted pricing for goods and services. FTC Chair Lina Khan emphasized the potential risks posed by companies that manage personal data, highlighting concerns that this information could be leveraged to impose higher prices on consumers. She affirmed that Americans have the right to understand whether their detailed consumer data is being used for surveillance pricing, and the inquiry aims to illuminate this obscure landscape of pricing intermediaries.
The FTC is specifically looking for details on four areas: the types of surveillance pricing products and services offered by each company, methods of data collection, sales and customer information, and the effect of these practices on consumer pricing.