Instacart's AI Pricing Probed

What happened

The Federal Trade Commission initiated an investigation into Instacart's AI-driven pricing tool, Eversight, following reports of inconsistent pricing and potential price discrimination. This tool enables retailers to test varied pricing strategies, leading to observed discrepancies of up to 23% for identical groceries across different customers. The probe will assess whether Instacart's differential pricing constitutes an unfair or deceptive practice, coinciding with new FTC leadership's intent to reduce surveillance pricing studies. New York's Algorithmic Pricing Disclosure Act already mandates disclosure for dynamic pricing, with similar legislation emerging elsewhere.

Why it matters

The use of AI-driven dynamic pricing, specifically Eversight, introduces an accountability gap regarding pricing transparency and consistency. This increases exposure for platform operators and procurement teams to regulatory scrutiny concerning potential price discrimination and unfair trade practices. The absence of explicit, consistent pricing controls across customer segments raises due diligence requirements for compliance and legal teams to ensure adherence to emerging algorithmic pricing disclosure legislation, such as New York's Act, and to mitigate risks associated with variable pricing models.