The Federal Trade Commission (FTC) has ordered nine companies to reveal information about their pricing strategies and, in some cases, how they determine pay for gig workers. The named companies include Delta Air Lines, United Airlines, JetBlue, Lyft, Uber, DoorDash, Instacart, Target, and Walmart. This effort seeks to determine whether prices or compensation for similar products or services vary based on personal data or involvement in loyalty programs.
The investigation is part of a market study under Section 6(b) of the FTC Act. This provision allows the commission to conduct comprehensive studies without focusing on law enforcement. It’s an information-gathering exercise, not an accusation of wrongdoing by these companies. Newsweek has reached out to both the FTC and the involved companies for comments outside of office hours.
Companies Under Scrutiny
The FTC has pinpointed several airlines—Delta, United, and JetBlue—and two ride-share firms—Lyft and Uber. Also included are food-delivery firms DoorDash and Instacart, as well as retailers Target and Walmart. The focus goes beyond visible pricing. For services like ride-sharing and delivery, the FTC is interested in how these companies determine worker pay. Offers to drivers might involve complex formulas, possibly factoring in data such as phone usage or the driver’s acceptance history. The FTC seeks detailed information from these companies on the processes they use to set consumer prices and worker pay. They’ve given each company 45 days to respond, with the option to enforce compliance through the courts if necessary.
Understanding Personalized Pricing
Personalized pricing involves offering different prices to different customers based on data regarding their behavior or attributes. This can include online habits, past purchases, or loyalty program activity. It differs from typical price changes due to sales, location, demand, or service costs. A price difference alone doesn’t prove the use of personal data for setting specific customer prices.
The FTC aims to assess what information companies actually use for pricing and whether similar data affects job offers for gig workers. Previous FTC studies in 2024 focused on intermediary companies providing pricing tools, whereas the new orders target businesses that implement these practices directly.
Consumer Reports’ Findings on Instacart
Instacart, one of the companies receiving an FTC order, was separately tested by Consumer Reports along with Groundwork Collaborative and More Perfect Union, for pricing consistency. Volunteers shopped for identical grocery baskets on Instacart. Results showed that three-quarters of the items appeared at multiple prices, with some differing by up to 23 percent. Overall, basket totals varied by about 7 percent.
The research also covered retailers like Albertsons, Costco, Kroger, and others. Although price variation was observed, personalized data wasn’t identified as the cause of differences. Instacart insisted that customers were randomly assigned to test groups and denied using personal data to set prices. They reported that 10 retail partners employed its Eversight pricing tools during the investigation but did not list them individually. Target stated no formal business ties or direct pricing data exchanges with Instacart.
Following the inquiry, Instacart discontinued the technology enabling simultaneous varied pricing at certain retailers. A survey of over 2,200 U.S. adults found that 72 percent oppose differential pricing practices. Len Sherman, an adjunct professor at Columbia Business School, described the widespread use of algorithmic pricing as an ongoing social experiment.
Future Steps
The gathered responses may assist the FTC in evaluating the factors impacting pricing and pay decisions. This initiative itself does not determine fairness or legality, and no findings against any companies have been announced. The FTC plans to collect direct insights from businesses, moving from past studies on pricing tool intermediaries. The timeline for publicizing the study results remains unspecified.
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