Instacart Discontinues AI-Pricing Trials After Scrutiny

Instacart has announced it will cease utilizing an artificial intelligence system that allowed varying pricing for identical grocery products sold by different retailers on its platform.

A representative from Instacart disclosed in an email to CBS News that the immediate cessation of all product price experiments on their service was underway, ending retailers’ ability to employ the Eversight technology for pricing tests.

This decision aligns with findings from an investigation led by Consumer Reports and the advocacy group Groundwork Collaborative, which identified that chains including Albertsons, Costco, Kroger, Safeway, Sprouts Farmers Market, and Target had been involved in AI-driven price testing.

Evidence from over 400 volunteer-led online shopping analyses in September supported these findings. Notably, a pricing experiment at a Seattle Safeway saw the cost for a package of Wheat Thins fluctuate by up to 23%.

While Instacart has stopped these specific tests, it confirmed that retailers will still have the autonomy to define pricing on the platform and may choose to apply varied pricing at physical store locations.

Instacart's decision follows the introduction of the Eversight AI pricing tool in 2022 and broader use among retail companies starting in 2023.

The company emphasized that the AI pricing trials did not assess personal, demographic, or behavioral data from users. The move to discontinue these trials was a direct reaction to feedback from Instacart’s customer base, as noted by a company spokesperson.

News agency Reuters reported on December 17 that the Federal Trade Commission had launched an inquiry into Instacart’s AI-based pricing practices. The FTC declined to comment on the matter but expressed concern over reports related to Instacart’s pricing strategy.

The FTC has not yet commented on Instacart’s decision to suspend the AI pricing tool.

In another recent development, Instacart agreed to pay $60 million in refunds to customers. This settlement addresses federal charges of deceptive practices, following allegations by the FTC that Instacart misled customers with promises of free delivery and obscurely presented service fees.