Instacart has announced it will halt controversial price testing on its platform, following mounting scrutiny from consumer advocacy groups, lawmakers, and regulators. The move comes after a Consumer Reports investigation revealed that the company’s AI-driven pricing experiments may have been inflating grocery bills for some users.
The Controversy: Variable Pricing for Identical Items
The Consumer Reports study found that Instacart’s tests involved showing different prices for the same products to different customers—sometimes differing by as much as 23%. This variation could equate to an annual increase of $1,200 in grocery expenses for affected families. The tests became possible after Instacart acquired Eversight, an AI pricing company, in 2022. The company then offered this technology to retailers to “optimize” prices.
This is significant because it highlights how algorithms can be used to extract maximum revenue from consumers, even if it means different people pay different amounts for the same goods. While Instacart initially denied the practice as dynamic or surveillance pricing, framing it as simple A/B testing, the public pressure proved too strong.
Lawmaker and Regulatory Action
The issue drew immediate attention from lawmakers, with Sen. Ruben Gallego introducing a bill to curb “surveillance” pricing and Rep. Angie Craig demanding answers from Instacart. Senate Minority Leader Chuck Schumer also pressed the Federal Trade Commission (FTC) to investigate, citing the Consumer Reports findings.
The FTC’s action is critical because it suggests regulators are increasingly aware of how tech companies can exploit pricing structures. Just days before Instacart’s announcement, the FTC reached a $60 million settlement with the company over deceptive practices, including false advertising of “free delivery” and undisclosed membership terms.
Instacart’s Response and Future Implications
Instacart maintains that the tests were not intended to be dynamic or surveillance pricing, claiming they were random experiments. However, it acknowledges that the tests “missed the mark” for some customers. As a result, it will end all item price tests and prevent retailers from using Eversight technology on its platform.
This means that shoppers at the same store, buying the same items at the same time, will now see the same price.
“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 in a blog post.
The long-term implications of this case are clear: companies are being forced to re-evaluate their pricing strategies under scrutiny. While Instacart denies wrongdoing, the public backlash and regulatory pressure show that consumers and lawmakers are paying closer attention to how AI-driven pricing impacts their wallets.
