Instacart Stops AI Pricing Trials Amid Criticism

• Consumer Reports study found an average 7% price difference for identical grocery lists, with some variations reaching 23% between different shoppers
• The FTC is investigating Instacart's Eversight pricing tool, which allowed retailers to conduct randomized price tests without shopper awareness
• The reversal adds to growing regulatory concerns about AI-driven pricing tactics including dynamic pricing and personalized pricing based on consumer data

Instacart Ends AI-Driven Price Testing Following Consumer Backlash

Instacart announced Monday it is immediately terminating all price testing experiments on its platform after facing significant criticism over its Eversight AI pricing tool. The decision follows a study by Consumer Reports and two nonprofit organizations revealing that different shoppers were shown varying prices for identical grocery items from the same stores at the same time.

Key Findings:

• Price disparities reached up to 23% between shoppers for the same items
• The study found an average 7% price difference across grocery lists
• Tests were conducted without shoppers' awareness, as previously stated on Instacart's website

Regulatory Scrutiny:

The U.S. Federal Trade Commission has been investigating Instacart's Eversight pricing tool, which enabled retailers to conduct randomized price tests to measure consumer responses to price changes.

Company Response:

In a blog post, Instacart acknowledged the practice raised concerns during a time when families are struggling with grocery costs, stating "That's not okay." The company committed to ending all item price tests immediately, approximately two weeks after the study's findings were published.

Market Context:

This incident adds to growing concerns over AI-driven pricing strategies, including dynamic pricing based on demand and personalized pricing using consumer data. The backlash highlights increasing public scrutiny and calls for regulation of algorithmic pricing practices in retail.

The controversy underscores the challenges facing tech-enabled retail platforms in balancing pricing optimization strategies with consumer trust and transparency, particularly in essential categories like groceries where price sensitivity is high.