# FTC Investigates Instacart’s AI Pricing tool Amid Consumer Concerns
The Federal Trade Commission is examining how artificial intelligence (AI) is being used to set prices on Instacart, raising questions about fairness and transparency in the rapidly evolving grocery delivery market.
The FTC has issued a civil investigative demand to Instacart, seeking information about its Eversight tool, according to a Reuters report published on Wednesday, December 17. Eversight, acquired by Instacart in 2022, allows retailers using the platform to experiment with different pricing strategies powered by AI. The inquiry follows a recent study that highlighted critically important price discrepancies for the same products among different Instacart shoppers.
“The Federal Trade Commission has a longstanding policy of not commenting on any potential or ongoing investigations,” a senior official stated. “But, like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices.”
the launch of the probe does not automatically indicate wrongdoing, and the FTC’s investigations do not always result in legal action, Reuters clarified. However, the inquiry underscores growing scrutiny of AI-driven pricing models and their potential impact on consumers, notably as the cost of living continues to strain household budgets.
Did you know?-The FTC has the authority to issue civil investigative demands, similar to subpoenas, to gather information during investigations. These demands compel companies to provide documents and testimony.
Consumer Reports Study Reveals Price Variations
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the investigation was prompted, in part, by a report released last week by Consumer Reports, conducted in partnership with the advocacy groups Groundwork collaborative and More perfect Union.the study involved 437 shoppers across four cities and revealed substantial price differences for identical grocery lists purchased from the same stores.
On average, shoppers experienced a 7% difference in the total cost of their groceries. Disturbingly, some shoppers encountered prices as much as 23% higher than those offered to other customers for the exact same items, at the same store, and at the same time, the study’s authors found.
Pro tip:-When grocery shopping, compare prices across different stores and delivery services. Consider using multiple apps or visiting stores directly to find the best deals.
Instacart Defends Pricing Practices
Instacart has responded to the criticism, arguing that media coverage has “inaccurately blurred together fundamentally different things: A/B price tests, dynamic pricing, and surveillance pricing.” In a blog post published last week, the company asserted that its pricing tests are not examples of dynamic pricing and that it does not utilize personal, demographic, or behavioral data to determine prices.
The company also disputed a claim from the Consumer Reports study that these pricing tests coudl add $1,200 to a typical family’s annual grocery bill. “Our retailer partners control their pricing strategies on Instacart, and we work with them to align online and in-store pricing wherever possible,” Instacart added.
Rising Financial Strain on Consumers
The timing of this investigation is significant, as a growing number of Americans are struggling to make ends meet. Recent research by PYMNTS Intelligence revealed that 42% of consumers surveyed in October were living paycheck to paycheck out of necessity – an 18% increase as august. This heightened financial vulnerability makes concerns about potentially unfair or opaque pricing practices all the more pressing.
Reader question:-Do you think AI-driven pricing is inherently unfair, or is it simply a new way for businesses to optimize profits? What are your thoughts?
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The FTC’s investigation into Instacart’s pricing practices is ongoing as of december 20, 2023. The outcome remains uncertain, but the case highlights the increasing need for regulatory oversight
