The Federal Trade Commission (FTC) has initiated an inquiry into several prominent companies concerning their use of customer data, algorithms, and artificial intelligence in personalized pricing strategies.
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On Tuesday, the FTC directed inquiries to eight companies across various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, seeking information on how these pricing practices affect privacy, competition, and consumer protection.
These companies utilize data-driven tools, such as artificial intelligence, to implement a practice dubbed “surveillance pricing,” also known as “dynamic pricing.” This method allows companies to present different prices to consumers for identical products based on individual characteristics or behaviors, including location, demographics, credit history, and browsing or shopping patterns.
Many of the firms being investigated provide transaction, sales, and pricing services to some of the largest organizations in the United States and around the world. Task Software handles transaction management for major hospitality entities like McDonald’s and Starbucks, while Revionics offers retail price optimization software and analytics to global retailers, including Home Depot. Pros, which claims to deliver AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft on technology development.
The FTC aims to explore this “opaque market” that categorizes consumers and sets tailored prices for goods and services.
“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,” stated FTC Chair Lina Khan. “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 particularly interested in four critical areas: the types of surveillance pricing products and services offered by each company; their methods of data collection; customer and sales data; and how these practices ultimately impact the prices consumers pay.