Report from CNBC
In Brief – Instacart will stop allowing retailers to use its Eversight AI-enabled price testing technology on its grocery delivery platform. The move followed public criticism, a consumer advocacy group study, and scrutiny from lawmakers and regulators. In a blog post, the company said that allowing retailers to run pricing experiments that showed different consumers different prices for the same item at the same store undermined customer trust in the platform. Instacart had billed Eversight as a tool to help retailers optimize pricing, boost sales and surface better deals for shoppers. However, a recent study by Consumer Reports claimed that the platform’s algorithmic pricing tools could result in shoppers paying total basket costs that could vary by about 7%, which could add more than $1,000 annually to some customers’ grocery bills. The Federal Trade Commission, which recently reached a settlement with Instacart that will see the platform refund $60 million to users based on allegedly deceptive subscription and advertising practices, reportedly sent Instacart a civil investigative demand regarding its pricing practices. Instacart reiterated that retailers always controlled prices on its app, rejected claims that the tools amounted to any form of surveillance or dynamic pricing, and that Eversight only allowed retailers to engage in standard A/B price tests, just within single stores rather than only between stores.
Context – Consumer advocates and media have been stoking fears that the internet and other technology would be used to unfairly raise prices and target consumers for many years. The prospect that AI is involved is only the latest iteration. In August 2024, at the height of the last Presidential campaign, the Department of Justice filed an antitrust lawsuit against RealPage, an apartment-pricing software provider accused of enabling landlords to use AI to coordinate rent increases. The DoJ recently settled that suit, limiting RealPage’s use of nonpublic data to train its AI models to data that is more than 12 months old, and requiring the company to remove or redesign features that could limit landlord price decreases.