Instacart is facing immediate scrutiny from the Federal Trade Commission (FTC) over its AI-powered pricing tool called Eversight. The probe follows years of complaints about the way the company’s price-fixing algorithms work. Instacart’s spokesperson has told TechCrunch that a lot of the conjecture about their new pricing structure has been misunderstood.
One sign of the FTC’s interest in this area is a civil investigative demand they’ve sent to Instacart, pressuring the company to explain its pricing model. According to the spokesperson, Instacart does not employ real-time price changes or adjust prices based on supply and demand dynamics. Instead, the company leaves it to its retail partners, who still keep a lot of parameterization to control their own pricing strategies, to do so.
“First, our retail partners control their pricing strategies, and we work with them to align their online and in-store pricing wherever possible. Second, these tests don’t include dynamic pricing or surveillance pricing. Unlike other grocery delivery apps, prices on Instacart are fixed in advance and aren’t dynamic by supply and demand. We never use personal, demographic, or user-level behavioral data to price items. The spokesperson went on to explain that these tests utilize randomized A/B testing. It’s exactly like how retailers have long done pricing tests across stores.
Instacart’s Eversight tool is designed to assist retail partners in optimizing their pricing strategies while ensuring consistency across various platforms. Despite the advanced technology involved, the company emphasizes that its pricing remains stable and is not influenced by individual consumer data or market fluctuations.
The FTC’s probe echoes even broader concerns about the use of artificial intelligence in retail environments. As companies increasingly adopt technology to streamline operations, regulatory bodies are keen to ensure that consumer protection remains a priority.
