The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to implement personalized pricing strategies.
On Tuesday, the FTC issued orders to eight firms across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The agency seeks information on how these pricing practices impact consumer privacy, competition, and protection.
These companies utilize data tools, employing techniques often referred to as “surveillance pricing” or “dynamic pricing.” This methodology allows businesses to present varying prices for identical products to different consumers based on factors such as location, demographics, credit history, and online behavior.
Many of the firms being investigated provide transaction and pricing services to some of the largest companies in the United States and around the world. Task Software manages transactions for notable hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization software to significant chains, including Home Depot. Pros, a software provider known for its AI-driven pricing solutions, serves clients such as Nestlé, HP, and United Airlines, and collaborates with Microsoft on technology development.
The FTC aims to clarify the complexities of this “opaque market,” which involves categorizing consumers and adjusting prices accordingly. FTC Chair Lina Khan emphasized the potential privacy risks associated with the extensive gathering of personal data, suggesting that companies may exploit this information to impose higher prices on customers. She 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 FTC is particularly interested in four areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales information, and how these pricing strategies affect the final prices consumers pay.