The Federal Trade Commission is investigating an emerging business practice that the agency calls "surveillance pricing." By analyzing user behavior and demographic data, AI systems may tailor prices to individual consumers. Eight companies (none of which have been accused of anything illegal) have been ordered to explain to the FTC how algorithmic price adjustments might affect shoppers. Those companies "have publicly touted their use of AI and machine learning to engage in data-driven targeting," FTC chief technologist Stephanie Nguyen
tells freelance journalist Webb Wright.
Why it matters: Personalized pricing, as applied to in-person transactions such as car purchases, is an old custom. But when performed by algorithms in the course of online shopping, the process is less obvious and perhaps more intrusive. University of Chicago marketing professor Jean-Pierre Dubé says prices could be personalized along "dimensions that aren't acceptable" if companies use consumer information that hasn't been knowingly shared.
What's next: Mastercard, JPMorgan Chase, e-commerce platform Bloomreach, consulting firms Accenture and McKinsey & Company, and software companies Revionics, TASK Software and PROS were ordered to submit reports describing their use of surveillance pricing to the FTC this week. The FTC's Nguyen says those reports will "bring more information about this practice to light." --
Ben Guarino
