The Federal Trade Commission (FTC) has initiated an investigation into several major companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
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The FTC has contacted eight firms, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, requesting information about how their pricing practices affect privacy, competition, and consumer protection.
These companies utilize data tools, like AI, in a practice referred to as “surveillance pricing” or “dynamic pricing,” which allows them to present different prices for the same products based on various consumer attributes, such as location, demographics, credit history, and browsing or shopping behaviors.
Many of the companies involved provide transaction, sales, and pricing services to some of the largest firms both in the U.S. and internationally. Task, for instance, handles transaction management for major hospitality brands like McDonald’s and Starbucks, while Revionics offers retail price optimization software and analytics for global chains such as Home Depot. Pros, known for its AI-driven pricing solutions, serves clients including Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to clarify the workings of this “opaque market,” which categorizes consumers and sets targeted prices based on their data.
FTC Chair Lina Khan remarked, “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 is seeking information in four primary areas: the types of surveillance pricing products and services each company offers, their data collection methods, customer and sales information, and the extent to which these practices influence the prices consumers ultimately pay.