Instacart shuts down dynamic AI pricing experiments following scrutiny of its tests – News

Instacart operator Maplebear Inc. said today it’s going to cancel a controversial experiment that used artificial intelligence to show different prices for different products to some consumers.

The company said in a blog post that retailers will no longer be given access to its Eversight technology, which allowed them to use AI algorithms to experiment with dynamic product prices. The decision came after the practice was scrutinized in a wide-ranging study and criticized by some U.S. lawmakers.

Instacart paid $59 million to acquire Eversight in 2022. The software enables retailers to conduct pricing tests to assess how shoppers react to higher or lower prices on different items. At the time of the acquisition, the company said it would use the technology to help online retailers improve their sales and revenue growth and “surface the best deals for customers.”

“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,” the company admitted. “At a time when families are working exceptionally hard to stretch every grocery dollar, those tests raised concerns, leaving some people questioning the prices they see on Instacart. That’s not okay – especially for a company built on trust, transparency, and affordability.”

The decision follows a study earlier this month published by Consumer Reports, which found that Instacart’s algorithmic pricing tools were responsible for some shoppers paying more than others to purchase identical items from the same store. All told, the cost of the same basket of items varied by about 7%, the study found. That could result in some shoppers paying an additional $1,000 for the costs of goods per year.

Instacart – an online grocery delivery service that allows customers to order groceries from local stores through a website or mobile app – initially responded to the study by saying retailers were responsible for the prices shown to consumers. In today’s blog post, it doubled down on this assertion, while rejecting claims that the technology enables “dynamic pricing” or “price surveillance.” It added that the tests were never based on personal, demographic or individual user data.

However, the practice has attracted a lot of unwelcome attention for the company. Last week, the Federal Trade Commission sent a civil investigative demand to Instacart about its pricing mechanisms.

Constellation Research analyst Holger Mueller told News that Instacart might feel a tad aggrieved that people are getting so upset about its dynamic pricing experiments. “Pricing is always a sensitive topic, but it’s interesting that consumers don’t seem to mind yield pricing on things like airline tickets, but they get upset about it when it’s applied to groceries,” he said. “Nonetheless, it’s good that Instacart is listening to its customers and rolling back these tests.”

PInstacart is no stranger to controversy. Last week, in a separate case, the company was ordered by the FTC to pay $60 million in refunds to customers over claims it had used deceptive tactics with its “satisfaction guarantee” and its advertising.

Image: Consumer Reports