File photo: Instacart shopper Loralyn Gegat delivers to a customer’s home in Falmouth, Massachusetts, on April 7, 2020.
David L. Ryan | Boston Globe | Getty Images
instacart announced on Monday that it would stop using artificial intelligence pricing tests on its grocery delivery platform after the practice came under scrutiny in a wide-ranging investigation and condemned by lawmakers.
The company said in a blog post that retailers will no longer be able to use its Eversight technology to conduct price experiments on its platform, effective immediately.
“We understand that in testing with a small number of retail partners, the results of different prices for the same product in the same store were off the mark for some customers,” the company said in a statement. “At a time when families are working so hard to get the most out of their grocery dollars, these tests raise concerns and make some question the prices they see on Instacart. That’s OK, especially for a company built on trust, transparency, and affordability.”
Instacart acquired Eversight in 2022 for $59 million. Eversight’s software allows retailers to conduct price tests to measure how shoppers react to increases or decreases in the price of specific products.
Instacart said at the time that the technology would help retailers increase sales and growth while “giving customers the best deals.”
Earlier this month, an investigation by Consumer Reports and other organizations found that Instacart’s algorithmic pricing tools caused shoppers to pay different prices for identical items in the same store.
The total cost of the same basket of products in a single store can vary by approximately 7%, which can result in more than $1,000 in additional costs per year for customers. In response, Instacart said retailers determine the prices listed on the app.
The company also rejected characterizing the technology as supervised pricing or dynamic pricing, saying its tests were in no way based on personal, demographic, or individual-level user data.
Reuters reported last week that the Federal Trade Commission sent Instacart a request for a civil investigation into its pricing practices.
Separately, Instacart was ordered last week to pay $60 million in refunds to customers to resolve allegations from the FTC that it used deceptive tactics in subscription sign-up, “satisfaction guaranteed” advertising and other processes.
Instacart denied the allegations of wrongdoing. The company said it answered questions from the FTC about its AI pricing tools as part of the settlement.
