The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies to examine their use of customer data, algorithms, and artificial intelligence in setting individualized pricing.
The investigation targets eight companies across various sectors — Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has issued orders to these firms, seeking insights into the implications of their pricing strategies on privacy, competition, and consumer protection.
Companies are utilizing data analysis tools, such as AI, to implement a strategy referred to as “surveillance pricing” or “dynamic pricing.” This method allows businesses to display varied prices for identical products based on consumer traits or behaviors, such as location, demographics, credit history, and online activity.
Many of the firms involved in the investigation provide essential transaction, sales, and pricing services to numerous leading corporations in both the United States and globally. For instance, Task Software is known for managing transactions for major hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization and pricing analytics for global entities like Home Depot. Pros, which markets itself as a provider of AI-enhanced pricing solutions, serves clients including Nestlé, HP, and United Airlines and collaborates with Microsoft on technology development.
The FTC aims to clarify the nature of this “opaque market,” which involves categorizing shoppers and establishing targeted pricing strategies.
“Businesses that exploit Americans’ personal data risk compromising their privacy. It appears some firms might be using this extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Consumers deserve transparency regarding whether businesses leverage detailed data for surveillance pricing, and our inquiry will illuminate this obscure landscape of pricing intermediaries.”
The FTC is particularly interested in four critical areas: the types of surveillance pricing products and services offered by each firm, data collection methods, customer and sales information, and the overall impact of these surveillance practices on consumer pricing.