**Excerpt:** Instacart has ceased its use of an AI pricing tool that allowed retailers to implement variable pricing for identical items following an investigation by advocacy groups.
Key Points
– Instacart ends AI-powered pricing tests amid scrutiny.
– The decision follows an investigation revealing price variations up to 23% for identical items.
– Retailers will continue to set their own prices on the platform.
– The Federal Trade Commission is reportedly investigating Instacart’s pricing practices.
– Instacart recently settled a case involving deceptive advertising for $60 million.
Full Article
Instacart’s Decision to End AI Pricing Tests
On Monday, Instacart announced it would discontinue the use of an AI-driven pricing tool that permitted retailers to charge different prices for the same items on its grocery delivery platform. An Instacart spokesperson stated, “Effective immediately, Instacart is ending all item price tests on our platform.”
Findings from the Investigation
The announcement follows an investigation conducted by Consumer Reports and Groundwork Collaborative, which uncovered that major retailers like Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market, and Target were using the AI pricing system. The investigation was based on data from over 400 volunteers who participated in online shopping sessions in September. In one instance at a Safeway in Seattle, the price for a box of Wheat Thins fluctuated by as much as 23%.
Lindsay Owens, executive director of Groundwork Collaborative, commented, “Once we pulled back the curtain on Instacart’s hidden pricing experiments, the company had no choice but to close the lab.”
Retailer Pricing Continues
Despite ending the AI pricing tests, Instacart indicated that retailers would still determine their own pricing on the platform. The company clarified that different prices might still exist at various brick-and-mortar locations.
Instacart acquired the Eversight pricing platform in 2022 and commenced offering its pricing software to retailers in 2023. The company stated that the AI pricing tests did not leverage customers’ personal or demographic information.
Regulatory Scrutiny
The decision to halt the AI pricing tool also comes amid reports that the Federal Trade Commission (FTC) is investigating Instacart’s pricing practices. Although the FTC has declined to comment, they expressed concern over the alleged pricing practices reported in the media.
In a separate matter, Instacart agreed to pay $60 million in customer refunds to resolve federal allegations of deceptive practices, specifically related to false advertising concerning free deliveries and unclear service fees.
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