FTC Investigates AI-Powered Pricing Practices

The Federal Trade Commission (FTC) announced on Tuesday that it’s ordering eight companies offering AI-powered “surveillance service pricing” to provide information about the potential impact of these products on privacy, competition, and consumer protection. The investigation aims to understand how AI and other technologies are being used to alter pricing based on consumer behavior, location, and other personal data. This practice allows companies to charge different prices to different customers, raising significant concerns.

Companies Under Investigation

The eight companies targeted by the FTC's inquiry are:

• Mastercard

• Revionics

• Bloomreach

• JPMorgan Chase

• Task Software

• PROS

• Accenture

• McKinsey & Co.

These companies offer services that use AI to target prices for different customers. The FTC is seeking detailed information about the types of surveillance pricing services each company has developed and may license to third parties, along with current uses and the impact on consumer pricing.

FTC’s Concerns and Goals

FTC Chair Lina M. Khan expressed concerns about the potential exploitation of personal data for higher pricing. “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,” said Khan in a press release. The FTC’s inquiry aims to shed light on this shadowy ecosystem of pricing middlemen and inform the public about these practices.

Historical Context

Advertisers have long used location data and past purchases to tailor ads to users. However, the FTC is concerned that these practices are now being extended to implement surveillance pricing, which could lead to unfair pricing strategies based on detailed consumer data.

Implications for Consumers

The investigation seeks to uncover whether businesses are using consumer data to deploy surveillance pricing, potentially leading to higher costs for certain individuals. This practice could undermine consumer trust and raise significant privacy concerns.