Instacart Halts AI-Driven Pricing Tests Amidst Scrutiny and Regulatory Pressure
Instacart announced Monday it is immediately discontinuing the use of artificial intelligence-driven pricing tests on its grocery delivery platform. This decision follows significant scrutiny from a comprehensive study and strong rebukes from lawmakers, marking a pivotal moment for the company’s technological practices and its commitment to transparency.
The move comes after a blog post from Instacart detailed that retailers will no longer be able to leverage its Eversight technology for pricing experiments. Eversight, acquired by Instacart in 2022 for $59 million, utilizes software that allows retailers to conduct pricing tests to gauge consumer responses to varying price points on specific items. At the time of acquisition, Instacart positioned this technology as a means to enhance sales and growth for retailers while simultaneously surfacing optimal deals for consumers.
However, a recent study conducted by Consumer Reports and other organizations revealed that Instacart’s algorithmic pricing tools resulted in shoppers encountering different prices for identical items, even when sourced from the same store. The study indicated that the aggregate cost for a standard basket of groceries could fluctuate by approximately 7% within a single retailer, potentially leading to over $1,000 in additional annual expenses for consumers. Instacart’s previous response maintained that retailers ultimately control the prices displayed on the app and asserted that the pricing tests were not based on individual user data, demographics, or personal information, refuting claims of surveillance or dynamic pricing.
This internal shift at Instacart also occurs against a backdrop of increasing regulatory attention. Last week, Reuters reported that the Federal Trade Commission (FTC) had issued a civil investigative demand to Instacart concerning its pricing practices. Furthermore, Instacart was recently ordered to pay $60 million in customer refunds to settle claims with the FTC regarding alleged deceptive practices in its subscription sign-up processes, “satisfaction guarantee” advertising, and other operational areas. While Instacart has denied any wrongdoing, the company confirmed it addressed the FTC’s inquiries regarding its AI pricing tools as part of that settlement.
The company acknowledged the concerns raised by its recent pricing tests. “We understand that the tests we ran with a small number of retail partners that resulted in different prices for the same item at the same store missed the mark for some customers,” Instacart stated. “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.” This statement underscores Instacart’s recognition of the delicate balance between leveraging technology for business optimization and maintaining customer trust, particularly in an economic climate where consumers are highly price-sensitive. The discontinuation of these AI pricing tests suggests a strategic recalibration in response to both public perception and regulatory oversight, aiming to rebuild confidence in its platform’s pricing integrity.
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