In July, the Federal Trade Commission (FTC) launched an investigative study seeking information on “surveillance pricing” – a pricing strategy in which sellers incorporate customer data to charge different customers different prices. In a new insight, Director of Competition Policy Fred Ashton walks through how personalized pricing works, considers what the FTC should look for in its investigation, and notes the risk of bias in the proceedings.

Ashton concludes:

The FTC’s investigative study into personalized pricing seeks information about the impact these pricing tactics have on data privacy, competition, and consumer protection, as well as the role third-party intermediaries play in developing these prices.

There are many things for the FTC to consider during its investigation, but at the forefront must be consumer welfare and consumer protection. Absent evidence of collusion or illegally obtaining data, the FTC should acknowledge that pricing strategies are a form of competition, and a decision best left to individual firms.

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