On Monday, December 22, Instacart, the American fresh grocery delivery platform, announced that it would immediately stop AI-driven pricing tests on its platform. This decision came after extensive research by consumer groups and criticism from lawmakers, accusing the company of raising shopping costs for certain consumers.
In an official blog post, Instacart stated that retailers are no longer allowed to use Eversight technology for pricing tests on the platform.
The company acknowledged, “We understand that tests conducted with a few retail partners resulted in price discrepancies for the same store and the same goods, which left some customers dissatisfied. In a time when families are trying to carefully budget every penny for groceries, these tests have raised concerns and led some to question the prices they see on Instacart. This should not happen, especially for a company known for trust, transparency, and affordability.”
In 2022, Instacart acquired Eversight for $59 million. Eversight’s software allows retailers to conduct price tests to observe consumer reactions to price changes for specific products.
At the time of the acquisition, Instacart stated that this technology helps retailers boost sales and foster growth while also helping to “find the best deals for consumers.”
However, earlier this month, a study released by Consumer Reports and other organizations found that Instacart’s algorithmic pricing tool led to consumers paying different prices for the same items in the same store. The total difference in the same shopping basket was around 7%, which could result in consumers spending over $1,000 more annually.
In response, Instacart stated that the prices of products on the platform are determined by retailers themselves and denied that the technology involved “surveillance pricing” or “dynamic pricing,” emphasizing that the tests never used individual, demographic, or user-specific data.
Last week, the Federal Trade Commission (FTC) issued a civil investigative demand to Instacart concerning its pricing practices.
Additionally, Instacart was also ordered last week to refund customers $60 million to settle charges brought by the FTC. The FTC accused Instacart of misleading practices in its subscription enrollments, “satisfaction guarantee” advertisements, and other marketing tactics.
Instacart denied all allegations of wrongdoing and stated that, as part of the settlement agreement, it has responded to the FTC’s questions regarding its AI pricing tool.