FTC Investigates AI Pricing Strategies: How Companies Determine Prices Based on Consumer Behavior

On Tuesday, the Federal Trade Commission (FTC) announced an investigation into eight companies that provide AI-driven "surveillance service pricing." This inquiry aims to gather information about how these technologies may impact privacy, competition, and consumer protection.

The FTC is investigating how artificial intelligence and other technologies adjust pricing based on consumer behavior, location, and personal data. This approach enables companies to charge varying prices to different customers, raising concerns about fairness and transparency.

The eight companies under scrutiny include Mastercard, Revionics, Bloomreach, JPMorgan Chase, Task Software, PROS, Accenture, and McKinsey & Co. According to the FTC, all these firms utilize AI to optimize pricing strategies targeted at individual consumers.

The agency is requesting details regarding the specific surveillance pricing services each company has developed and potentially licenses to third parties, as well as insights into how these services are currently being used in the market. Additionally, the FTC is interested in understanding the effects of these services on consumer pricing.

“Companies that collect extensive personal data from Americans risk compromising individual privacy. They may exploit this information to charge consumers inflated prices,” stated FTC Chair Lina M. Khan in a press release. “Americans have the right to know if their detailed consumer data is being used for surveillance pricing, and the FTC’s probe will help clarify this obscure landscape involving pricing intermediaries.”

While advertisers traditionally leverage location data and past purchases to tailor advertising strategies, the FTC is wary that such practices may evolve into the more intrusive realm of surveillance pricing.