The U.S. Federal Trade Commission is investigating Instacart due to concerns surrounding its artificial intelligence-driven pricing tool, Eversight. This tool allows retailers on the platform to test varying prices, leading to allegations of inconsistent pricing for the same grocery items among different consumers.
Following the announcement of the probe, Instacart’s shares fell approximately 10% in after-hours trading. The FTC has issued a civil investigative demand to gather more information about the Eversight tool, which has been criticized after a study revealed significant pricing disparities. Research conducted by advocacy groups highlighted that consumers in four cities experienced an average price difference of 7% for identical grocery lists obtained from the same store. In some instances, shoppers discovered price variances as substantial as 23%.
While the FTC has not confirmed any wrongdoing, they have expressed concerns regarding the implications of such pricing practices, particularly amid rising living costs in the U.S. This issue has become increasingly important politically, impacting recent elections.
Instacart has pointed out that the Eversight tool operates through randomized pricing tests rather than fluctuating prices based on demand or individual consumer data. The company stated its commitment to promoting pricing parity by encouraging retailers to align online prices with in-store costs.
The investigation by the FTC highlights ongoing scrutiny of technology’s role in pricing strategies, particularly at a time when affordability is a pressing issue for many Americans.
Why this story matters
- It raises questions about fairness in pricing practices amid economic concerns.
Key takeaway
- The investigation stems from significant disparities found in grocery pricing for different consumers using the same platform.
Opposing viewpoint
- Instacart maintains that its pricing tool employs randomized testing rather than exploiting individual consumer data for price discrimination.
