Instacart pulls plug on AI pricing experiment after customer backlash

Instacart backs down from controversial pricing scheme

In a significant policy reversal, grocery delivery giant Instacart has terminated its AI-driven dynamic pricing experiment following public outcry and government investigations. The company confirmed Monday that all customers will now see identical prices when shopping the same store simultaneously.

The algorithm that divided shoppers

The now-defunct system, powered by technology from Instacart's 2022 acquisition Eversight AI, enabled retailers to display different prices to different users for identical products. While Instacart maintained the system didn't use personal data, consumers quickly noticed troubling patterns - neighbors receiving different quotes for the same cart of groceries.

Pressure mounts from all sides

Three key forces converged to force Instacart's hand:

Consumer advocates sounded alarms: Research from Consumer Reports and others documented concrete examples of price discrimination
Lawmakers took action: Senator Chuck Schumer pressed the FTC to investigate whether customers were unwitting test subjects
Regulators circled: The FTC reportedly launched a formal probe, while Instacart recently paid $60 million to settle separate deceptive practice claims

What changes - and what doesn't

Moving forward, retailers can no longer deploy Eversight's technology for personalized pricing tests. However, stores retain flexibility to adjust prices based on geographic location - meaning your urban grocery bill might still differ from suburban counterparts.

"We've heard clearly that these tests didn't meet some customers' expectations," the company acknowledged in a blog post. This rare admission suggests even tech firms recognize limits to algorithmic experimentation when fairness concerns arise.