The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
The FTC’s inquiry targets eight companies spanning various industries, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. These firms have been ordered to provide information about how their pricing practices impact privacy, competition, and consumer protection.
These companies utilize data tools, including artificial intelligence, in a process referred to as “surveillance pricing” or “dynamic pricing.” This practice involves displaying different prices to consumers based on their characteristics and behaviors, such as location, demographics, credit history, and online activity.
Many of the selected companies are instrumental in providing transaction, sales, and pricing services to major U.S. and international firms. Task Software manages transactions for well-known hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization tools to global retailers, including Home Depot. Pros, which specializes in AI-driven pricing solutions, counts large corporations such as Nestlé, HP, and United Airlines among its clientele and partners with Microsoft for technology development.
The FTC aims to clarify the complexities of this “opaque market,” where customer classifications lead to targeted pricing. 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 agency is particularly interested in four aspects: the specific surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these practices on the final prices customers pay.