Instacart slumps on report of FTC probing its AI pricing tool
Instacart dropped more than 7% in premarket trading on Thursday following an exclusive Reuters report that the FTC has launched a probe into the grocery delivery company’s AI-driven pricing tool. News of the probe follows a study published last week finding that Instacart’s prices for identical grocery lists at the same stores varied across users, with some grocery prices differing by as much as 23% per item from one customer to the next.
Per Reuters, the FTC has sent Instacart a civil investigative demand, seeking information about Eversight, a pricing tool that Instacart acquired in 2022 for $59 million. The platform allows retailers to test different price levels and promotions across products and categories, which Instacart says could drive 1% to 3% revenue growth and an incremental margin lift of 2% to 5%, according to its website.
In response to last week’s report, Instacart said its pricing practices have been “mischaracterized,” telling TechCrunch that retailers control prices on its platform and that the tests are “completely randomized,” not dynamic or based on individual user data.
In a statement reported by Reuters, the FTC said it “has a longstanding policy of not commenting on any potential or ongoing investigations,” but added that it is “disturbed by what we have read in the press about Instacart’s alleged pricing practices.”
The probe comes as Instacart doubles down on AI to boost its profitability in the low-margin online grocery space, as growth slows and competition from Amazon intensifies.
Go Deeper: The economics of Instacart’s grocery delivery are pretty tight — AI might help, or hurt
Per Reuters, the FTC has sent Instacart a civil investigative demand, seeking information about Eversight, a pricing tool that Instacart acquired in 2022 for $59 million. The platform allows retailers to test different price levels and promotions across products and categories, which Instacart says could drive 1% to 3% revenue growth and an incremental margin lift of 2% to 5%, according to its website.
In response to last week’s report, Instacart said its pricing practices have been “mischaracterized,” telling TechCrunch that retailers control prices on its platform and that the tests are “completely randomized,” not dynamic or based on individual user data.
In a statement reported by Reuters, the FTC said it “has a longstanding policy of not commenting on any potential or ongoing investigations,” but added that it is “disturbed by what we have read in the press about Instacart’s alleged pricing practices.”
The probe comes as Instacart doubles down on AI to boost its profitability in the low-margin online grocery space, as growth slows and competition from Amazon intensifies.
Go Deeper: The economics of Instacart’s grocery delivery are pretty tight — AI might help, or hurt
