The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence in personalizing pricing strategies.
Mars, the maker of M&M’s, is set to acquire Kellanova, the company behind Pop-Tarts, in a significant business deal this year.
In total, eight firms from various sectors—including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros—have been issued information requests by the FTC. The agency is examining how these pricing methods affect consumer privacy, competition, and protections.
The practice under scrutiny is referred to as “surveillance pricing” or “dynamic pricing,” where companies utilize data analytics, such as AI, to offer different prices for the same products based on consumer attributes, including location, demographics, credit history, and online behavior.
Many of the investigated companies provide critical transaction, sales, and pricing services to some of the largest corporations both in the U.S. and globally. Notably, Task Software manages transaction processes for major hospitality brands like McDonald’s and Starbucks, while Revionics supplies retail price optimization software used by chains like Home Depot. Pros, which specializes in AI-driven pricing solutions, counts Nestlé, HP, and United Airlines among its clients and collaborates with Microsoft.
The FTC aims to clarify what it describes as an “opaque market” that segments consumers and establishes tailored pricing models.
“Companies that exploit Americans’ personal data can jeopardize privacy. There is a concern that firms may utilize this extensive personal information to impose higher prices,” stated FTC Chair Lina Khan. “Americans have the right to understand if businesses are leveraging detailed consumer data for surveillance pricing, and this inquiry will illuminate the obscure pricing networks.”
The FTC is seeking insights in four main areas: the types of surveillance pricing services provided by each company, data collection methods, customer and sales data, and the effects of these practices on the prices customers ultimately pay.