Instacart’s Grocery Pricing Experiments Under Federal Investigation

A recent investigation that found Instacart is charging some customers nearly 25% more for the same products from the same store got a lot of people’s attention, including the Federal Trade Commission. According to a report from Reuters, the agency has opened a probe into Instacart’s pricing practices.

The FTC didn’t publicly confirm the probe due to its policy of not commenting on potential or ongoing investigations, but did tell Reuters, “Like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices.” The publication reported that sources familiar with the matter said the agency sent a civil investigative demand to Instacart specifically seeking information on the company’s Eversight pricing tool, a piece of software that Instacart describes as an AI-powered pricing and promotions platform.

The report that brought this scrutiny to Instacart— a collaboration with policy group Groundwork Collaborative, Consumer Reports, and More Perfect Union—had volunteers work to simultaneously add items to their Instacart carts from the same stores at the same times. The experiment found that prices could vary on identical items by as much as 23% and found that customer carts were paying, on average, 7% more than other customers with the exact same items at checkout. Instacart claimed the different prices were experiments run in partnership with a small subset of retailers, and the prices that people paid were randomized and not assigned to them based on demographic data or personal information.

Eversight, an AI company that Instacart acquired in 2022, became a central figure in the story. Shortly after acquiring the company, Instacart started using its software to “optimize” grocery prices and offer promotions. Per Groundwork Collaborative, Instacart has marketed the tool as a way to increase grocery store sales by 1% to 3% and a retailer’s margins by 2% to 5%. On its website, Instacart marketed the tool for retailers to “Optimize your pricing with AI” and told retailers it could “continuously drive growth with dynamic pricing through experimentation.” That language has since changed, but is still visible in archived versions of the page. That language was present until at least October of this year.

Following the report, a spokesperson for Instacart told Gizmodo, “These tests are not dynamic pricing – prices never change in real-time, including in response to supply and demand. The tests are never based on personal or behavioral characteristics — they are completely randomized.”

Earlier this month, after the initial report was published, Instacart published a company update titled “Instacart’s Commitment to Affordability,” in which the company said it has “focused heavily on encouraging more retailers to move toward in-store and online price parity, working closely with partners to remove markups and align online prices with in-store. And that work is paying off.”