The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies. This inquiry includes major firms such as Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, which were all requested to provide information on the implications of these practices on privacy, competition, and consumer protection.
These companies utilize tools like AI to implement what is known as “surveillance pricing,” or “dynamic pricing,” which allows them to display varying prices for the same products based on individual customer characteristics and behaviors. Factors influencing these price variations can include a consumer’s location, demographics, credit history, and their online browsing or shopping habits.
Many of the companies under scrutiny offer transaction, sales, and pricing services to some of the largest corporations in the United States and around the world. Task Software plays a crucial role in transaction management for major hospitality brands such as McDonald’s and Starbucks. Revionics specializes in retail price optimization software and analytics, assisting global retailers like Home Depot. Meanwhile, Pros provides AI-driven pricing solutions and counts Nestlé, HP, and United Airlines among its clientele, and has established a technology partnership with Microsoft.
The FTC aims to clarify the “opaque market” associated with targeted pricing practices that categorize shoppers. FTC Chair Lina Khan emphasized the potential privacy risks that arise from companies collecting extensive personal data and the possibility that this information is being used to impose higher prices on consumers. She stated, “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 critical areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the effects of these practices on the prices that consumers ultimately pay.