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Instacart's AI tool, Eversight, made headlines earlier this month after it was found to be showing people different prices for the same items on the app. Those tools are now being investigated by the Federal Trade Commission, Reuters reports.
The FTC has sent Instacart a civil investigative demand seeking more information about its AI pricing tool. "Like so many Americans, we are disturbed by what we have read in the press about Instacart's alleged pricing practices," the agency tells Reuters.
Eversight was acquired by Instacart for $59 million in 2022. According to its website, the tool enables brands to scale their pricing strategy and optimize prices for their consumers. However, a study published earlier this month by Groundwork Collaborative, Consumer Reports, and More Perfect Union noted how it negatively impacts customers.
The price of a dozen Lucerne eggs from a Safeway in Washington, for example, ranged from $3.99 to $4.79. Across the products examined in the study, the average difference between the lowest and highest prices was 13%. For an average American family of four, this could mean an extra $1,200 a year.
Last week, Instacart said the pricing strategy was a small-scale experiment conducted with 10 retail partners to help it "learn what matters most to consumers and how to keep essential items affordable." Following news of the FTC investigation, it told TechCrunch that news reports have "mischaracterized how pricing works on Instacart."
"Our retail partners control their pricing strategies, and we work with them to align their online and in-store pricing wherever possible," Instacart says. "These tests are a form of randomized A/B testing, similar to the way retailers have long run pricing tests between different stores."
In a Dec. 14 letter to the FTC, Sen. Chuck Schumer (D-NY) argued that "Consumers deserve to know when they are being placed into pricing tests," and urged the FTC to "require a prominent on-screen label."