The Federal Trade Commission has escalated its scrutiny of algorithmic pricing practices, sending a civil investigative demand to grocery delivery giant Instacart. The probe focuses on the company’s AI-powered pricing tool, Eversight, following a study that revealed significant and unexplained price discrepancies between users. According to the study, different users were shown different prices for identical items from the same store at the exact same time. In some instances, the price differences reached as high as 23 percent, with an average variance of around 7 percent for a standard basket of goods. Researchers estimated that such differential pricing could cost affected customers over one thousand dollars more per year. In a statement to the press, the FTC declined to comment on the specifics of any investigation but expressed clear concern. The commission stated it is disturbed by what has been reported in the press regarding Instacart’s alleged pricing practices. When the study initially surfaced, Instacart attributed the pricing variances to actions by its retail partners. The company claimed these partners conduct limited, short-term, and randomized tests using the Eversight AI tool to better understand consumer behavior. Instacart acquired the company behind Eversight in 2022. Instacart has pushed back against the characterization of its pricing model in media reports. A company spokesperson reiterated that retailers, not Instacart itself, run these pricing tests on the platform. The spokesperson emphasized that prices on Instacart do not change in real time, are not based on supply or demand dynamics, and that the company never uses personal, demographic, or individual user behavioral data to determine item prices. This investigation places a spotlight on the opaque use of artificial intelligence in dynamic pricing, a practice increasingly common across digital marketplaces. The core issue under examination is whether such algorithmic tools facilitate price discrimination, where different consumers are charged different amounts based on data profiles, potentially without their knowledge or consent. The outcome of the FTC’s inquiry could set important precedents for transparency and regulation in the rapidly evolving space of AI-driven commerce.
