Report from Reuters
In Brief – The US Federal Trade Commission (FTC) is demanding information from Delta, United, JetBlue, Lyft, Uber, DoorDash, Instacart, Target and Walmart about how they use personal data, including location, browsing history and income, to set individualized prices, wages and job offers. The FTC says it plans to publish a study examining the tools, strategies and data these companies use to help inform regulators and lawmakers. FTC Chairman Andrew Ferguson said the agency would scrutinize potentially opaque corporate methods and practices. State lawmakers have increasingly pursued restrictions on personalized pricing, especially for groceries, while business groups have opposed such laws, defending price flexibility and data-driven discounts as incentives for customer loyalty. A recent FTC policy statement warned that personalized pricing could violate consumer protection laws when it is unexpected and not clear to consumers.
Context – Progressive tech industry detractors have long criticized online pricing practices that result in some people getting lower price offers, and some people getting higher ones, on nearly every ecommerce website and app. Consumers like the lower prices. Businesses, on the other hand, benefit from the efficiency gains from tweaking prices up and down based on any number of factors to maximize revenue and clear inventory. Think of airline tickets. Airlines have been using dynamic pricing for over 50 years. The flood of state legislation has been boosted by claims that AI will supercharge the practice, especially by bringing personalized prices into physical stores. That’s a hypothetical scenario. There are no reports of any stores using surveillance, data and AI to apply in-store personalized pricing and there are so many real-world barriers. Nevertheless, banning the practice has become a blue state (and city) policy that officials say does something about affordability, AI, and corporate abuse. Meanwhile, the FTC’s activities look like a Republican effort to tick the same campaign boxes but without proposing to prohibit existing variable pricing practices common across ecommerce.