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.
The investigation targets eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has requested information related to how these pricing strategies affect consumer privacy, competition, and protection.
These companies utilize data-driven methods, often referred to as “surveillance pricing” or “dynamic pricing,” to present consumers with different prices for the same products based on individual characteristics and behaviors. Factors influencing these prices can include a consumer’s location, demographics, credit history, and shopping patterns.
Many of the firms under investigation play a role in providing transaction, sales, and pricing solutions to some of the largest businesses in the United States and beyond. For instance, Task Software manages transactions for major hospitality brands like McDonald’s and Starbucks, while Revionics offers price optimization software to retailers such as Home Depot. Pros, specializing in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft.
The FTC aims to clarify the operations of this “opaque market,” which categorizes consumers and establishes targeted pricing for various products and services. FTC Chair Lina Khan highlighted concerns about the potential risks to consumer privacy, stating that companies collecting extensive personal data might exploit this information for higher pricing. “Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing,” Khan said, emphasizing the inquiry’s goal to uncover the realities of this complex pricing ecosystem.
The FTC’s investigation will focus on four main areas: the types of surveillance pricing products and services available from each company; the methods of data collection; customer and sales data; and the impact of these practices on consumer pricing.