The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their practices related to customer data, algorithms, and artificial intelligence that are used to customize pricing for individuals.
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The FTC has ordered eight companies—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—to provide information about how their pricing strategies affect privacy, competition, and consumer protection.
Utilizing advanced data tools, including AI, these companies engage in a practice known as “surveillance pricing,” also referred to as “dynamic pricing,” where different prices are shown to consumers based on various factors such as demographics, location, credit history, and online behavior.
Many of the firms contacted by the FTC play a critical role in providing transaction, sales, and pricing services to some of the largest companies in the U.S. and worldwide. Task Software is known for managing transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers price optimization software to global retail chains, including Home Depot. Additionally, Pros specializes in AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clients, alongside its partnership with Microsoft in technology development.
The FTC aims to uncover the complexities within this “opaque market” that classifies consumers and sets varying prices based on their profiles.
“Companies that exploit Americans’ personal data can jeopardize privacy. Now, these firms may be taking advantage of extensive personal information to set higher prices,” stated FTC Chair Lina Khan. “Americans have the right to know if businesses are leveraging detailed consumer data for surveillance pricing, and this inquiry will illuminate the obscure dynamics of pricing middlemen.”
The FTC is seeking information in four main areas: the specific surveillance pricing products and services each company offers; their data collection methods; customer and sales data; and how these surveillance tactics impact the pricing that consumers ultimately pay.