Instacart Halts AI Pricing Tests After Backlash Over Inflated Grocery Bills
Instacart is ending its AI pricing experiments following a study showing they could cost shoppers over $1,000 annually. The decision follows regulatory scrutiny from the FTC over the controversial practice.
Instacart is ending its controversial AI-powered pricing experiments after a study revealed the tool could inflate a family's annual grocery bill by over $1,000. The move comes as the grocery delivery giant faces an inquiry from the Federal Trade Commission (FTC) over the practice.
In a blog post on Monday, the company announced that retailers will no longer be able to use its Eversight technology to run pricing experiments on the platform, effective immediately. "We understand that the tests... missed the mark for some customers," the company wrote, acknowledging that the tests "raised concerns, leaving some people questioning the prices they see on Instacart."
The decision follows a damning study released earlier this month by Consumer Reports and other organizations. The study found that Instacart's algorithmic tools led to shoppers paying different prices for identical items from the same store. The price variance for the same basket of goods was about 7%, a seemingly small figure that could add up to significant overpayment over a year.
The practice didn't just catch the eye of consumer advocates. Reuters reported last week that the FTC had sent a civil investigative demand to Instacart about its pricing practices, signaling a formal probe. The scrutiny adds to Instacart's regulatory headaches; the company recently agreed to pay $60 million to settle separate FTC claims of deceptive tactics in its subscription sign-ups, though it denied any wrongdoing.
Instacart acquired the Eversight software for $59 million in 2022, touting it as a way for retailers to test shopper reactions to price changes and ultimately "surface the best deals for customers." The company has consistently rejected characterizations of the technology as "dynamic pricing" and maintains that the tests were never based on personal, demographic, or individual user data.
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