Instacart ends AI-driven pricing tests that drove up costs for some shoppers

Instacart announced on Monday that it will discontinue its artificial intelligence-driven pricing experiments on its grocery delivery platform. This decision follows intense scrutiny from a comprehensive study and criticism from lawmakers regarding the impact of these practices on consumers. In a blog post, the company revealed that retailers would no longer utilize its Eversight technology for pricing experiments, effective immediately. Instacart acknowledged that the tests conducted with a limited number of retail partners led to discrepancies in pricing for identical items at the same store, which were troubling for some customers. They emphasized, "At a time when families are working exceptionally hard to stretch every grocery dollar, those tests raised concerns, leaving some people questioning the prices they see on Instacart. That's not okay – especially for a company built on trust, transparency, and affordability." Instacart acquired Eversight for $59 million in 2022. The software was designed to assist retailers in conducting pricing tests to understand shopper responses to various price adjustments. Instacart previously claimed that this technology would boost retailer sales while highlighting the best deals for consumers. However, a recent study by Consumer Reports and other organizations found that Instacart's pricing algorithms resulted in shoppers paying different prices for identical items from the same store. The analysis indicated that the overall cost for the same shopping basket varied by approximately 7%, potentially leading to over $1,000 in additional expenses for customers annually. In response, Instacart clarified that the prices displayed on the app are set by retailers and firmly rejected the term "surveillance pricing" or "dynamic pricing," asserting that the tests were not based on personal or demographic data. Additionally, reports surfaced last week indicating that the Federal Trade Commission (FTC) had issued a civil investigative demand to Instacart concerning its pricing methods. In a separate matter, Instacart was recently ordered to pay $60 million in refunds as part of a settlement over allegations of deceptive practices related to subscription sign-ups and advertising of its "satisfaction guarantee." The company has denied any wrongdoing and stated that they are cooperating with the FTC's inquiries regarding their AI pricing tools.