Instacart Discontinues AI-Powered Pricing Tool
Instacart said Monday that it would stop using an AI-powered tool that allows retailers to charge customers different prices for identical items on the grocery delivery platform. Effective immediately, Instacart is ending all item price testing on its platform, and retailers can no longer use Eversight technology to conduct item price testing on Instacart.
Background of the Issue
The announcement came after a recent investigation by Consumer Reports and Groundwork Collaborative, a nonprofit advocacy group, found evidence that retailers, including Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market, and Target, were testing the AI pricing system. The organizations based their findings on data collected by more than 400 volunteers during online shopping sessions in September. In a test conducted for Safeway in Seattle, the price of a box of Wheat Thins fluctuated by as much as 23%.
Reaction to the Investigation
Groundwork Collaborative executive director Lindsay Owens said in a statement Monday, “When we lifted the curtain on Instacart’s hidden pricing experiments, the company had no choice but to close the lab.” Retailers will continue to set their own prices on the delivery website and may continue to offer different prices at different brick-and-mortar locations, Instacart said in a blog post.
Details of the AI Pricing Tool
Instacart acquired Eversight, an AI-powered pricing platform, which was founded in 2022 and began providing pricing software for retail businesses in 2023. Instacart claims that its AI pricing tests did not take into account customers’ personal, demographic, or user behavioral characteristics. The decision to stop using its pricing tool was made in response to feedback from Instacart customers, a company spokesman said Monday.
Regulatory Investigation
Reuters reported on Dec. 17 that the Federal Trade Commission was investigating Instacart over its AI pricing tests. The FTC declined to comment on the report but said in a statement it was "troubled by what we have read in the press about Instacart’s alleged pricing practices." The FTC did not immediately respond to a request for comment on Instacart’s discontinuation of AI pricing technology.
Previous Allegations
In a separate case last week, Instacart agreed to pay $60 million in customer refunds to resolve federal allegations of deceptive practices after the FTC falsely advertised Instacart for free deliveries and failed to clearly disclose service fees.
