Instacart ends AI-driven price experiments after criticism

An instacart logo and an instacart webpage are shown in this photo, in New York, Wednesday, Sept. 6, 2023. (AP Photo/Richard Drew, File)

Instacart is ending price tests that resulted in different shoppers being shown different prices for groceries, the online retail platform said on Monday after criticism of its artificial intelligence-driven pricing tool.

The company faced an outcry after a study by Consumer Reports and two other nonprofits showed some shoppers saw prices up to 23% higher than others browsing the same grocery items from the same store at the same time.

Reuters last week reported that the U.S. Federal Trade Commission had questioned Instacart about its Eversight pricing tool, which allowed retailers to run random price tests to gauge shoppers’ reactions to higher or lower prices. Instacart had previously said on its website that shoppers were not aware of the experiments.

Instacart acknowledged dissatisfaction over the practice in a blog post on Monday, saying it was immediately ending all item price tests on the platform.

“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,” the company said.

Instacart made the announcement around two weeks after the study showing a 7% average difference in cost for the same grocery list at the same store.

The randomized tests join the list of AI-driven pricing tactics that have drawn public outcry and calls for regulation, along with dynamic pricing based on demand and personalized pricing based on shoppers’ data.

(Reporting by Jody Godoy in New York; Editing by Kirsten Donovan)