The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence to customize pricing.
On Tuesday, the FTC issued information requests to eight companies: Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The inquiry aims to explore how these pricing strategies affect privacy, competition, and consumer protection.
These companies utilize data analytics, including AI, in a practice known as “surveillance pricing” or “dynamic pricing,” where different prices may be presented to consumers for identical products based on various factors such as location, demographics, credit history, and online behavior.
Many of the firms contacted play integral roles in facilitating transaction and pricing services for major businesses across the United States and internationally. For instance, Task Software supports numerous hospitality brands, including McDonald’s and Starbucks, while Revionics supplies retail pricing optimization tools to global companies like Home Depot. Pros is a technology firm known for its AI-driven pricing solutions, serving clients like Nestlé, HP, and United Airlines, and is also a development partner for Microsoft.
The inquiry aims to clarify the complexities of a market that categorizes consumers and tailors specific prices for goods and services. FTC Chair Lina Khan expressed concerns about the implications of companies utilizing personal data, 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. 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 focusing on four critical areas: the types of surveillance pricing services offered by each company, their data collection methods, customer and sales information, and the ways these practices impact consumer pricing.