Instacart’s AI-driven pricing tool attracted attention — now the FTC has questions

Instacart is currently facing scrutiny from the Federal Trade Commission (FTC) regarding its AI-driven pricing tool, Eversight. The regulatory agency has issued a civil investigative demand to the grocery delivery service, seeking clarification on why customers are encountering significantly varying prices for similar items, particularly organic granola. Recent studies have demonstrated that shoppers can experience price discrepancies of up to 23% for identical groceries sourced from the same stores. Instacart asserts that these price tests are randomized and not influenced by a customer's browsing history. However, as consumers grapple with rising food costs, that explanation may not alleviate concerns. Dynamic pricing, while not a novel concept, raises eyebrows when applied to essential goods like groceries. This pricing model is widely adopted in various sectors, including airlines, hotels, and rideshare services, where companies argue it helps optimize profitability and align supply with demand. Yet, the distinction between paying a premium for a ride and facing higher grocery prices is significant, particularly when food is a basic necessity. Although the FTC's inquiry does not confirm any wrongdoing on Instacart's part, it reflects a broader concern regarding data-driven pricing strategies. In a tightening economy, the application of AI in pricing essential household items is likely to draw increased attention and scrutiny from regulators and consumers alike.