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 pricing strategies.
On Tuesday, the FTC issued demands for information from eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The regulatory body is especially interested in how these pricing methodologies may affect privacy, competition, and consumer protection.
These companies utilize data-driven strategies, known as “surveillance pricing” or “dynamic pricing,” which allow them to offer different prices to different consumers based on individual characteristics and behaviors. Factors influencing these price variations may include a consumer’s location, demographic information, credit history, and online shopping behavior.
Many of the firms under scrutiny provide critical transaction, sales, and pricing services to major businesses both in the United States and internationally. For instance, Task Software is known for its transaction management solutions for leading hospitality companies like McDonald’s and Starbucks, while Revionics specializes in retail price optimization and serves global chains such as Home Depot. Pros, a technology company known for its AI-driven pricing solutions, lists notable clients like Nestlé, HP, and United Airlines, and is a development partner with Microsoft.
The investigation aims to clarify the “opaque market” that enables businesses to classify consumers and adjust pricing based on this classification.
FTC Chair Lina Khan commented on the situation, stating, “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 FTC’s inquiry will focus on four primary areas: the types of surveillance pricing products and services provided by each company, their data collection methods, customer and sales information, and the impact of these practices on consumer pricing.