The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to personalize pricing strategies.
On Tuesday, the FTC issued requests for information to eight firms—Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The inquiry aims to assess how these pricing practices affect privacy, competition, and consumer protection.
Companies are employing data tools, particularly AI, in a technique known as “surveillance pricing” or “dynamic pricing.” This method allows businesses to present varying prices to consumers for identical products based on a range of factors, including location, demographics, credit history, and individual shopping habits.
Many of the involved companies offer transaction, sales, and pricing services to major corporations both in the U.S. and worldwide. Notably, Task Software is behind the transaction management systems for large hospitality chains like McDonald’s and Starbucks. Revionics specializes in retail price optimization software for firms like Home Depot, while Pros, which positions itself as a provider of AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines. Pros is also a technology partner of Microsoft.
The FTC’s investigation seeks to uncover the complexities of this “opaque market” that categorizes consumers and assigns targeted pricing.
FTC Chair Lina Khan emphasized the potential risks, 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.” She affirmed that the inquiry will provide insights into the practices of businesses regarding surveillance pricing.
The FTC is focusing on four main areas of inquiry: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales data, and the influence of these practices on consumer prices.