According to CNBC, shares of grocery delivery service Instacart plunged as much as 11% in extended trading on Wednesday. The drop followed a Reuters report that the U.S. Federal Trade Commission has sent a civil investigative demand to the company, launching a probe into its pricing practices. This news comes just a week after a study showed prices for identical products in the same supermarkets can vary by around 7% on Instacart, potentially costing users over $1,000 extra annually. The company has previously stated that retailers, not Instacart, set the prices in its app. Notably, in 2022, Instacart spent $59 million to acquire Eversight, a firm specializing in AI-driven pricing and promotions. The FTC and Instacart did not immediately respond to requests for comment on the investigation.
The Stakeholder Shakeup
So, who gets hurt here? Well, the immediate pain is for shareholders, obviously. An 11% after-hours nosedive is a brutal reaction, signaling that the market sees this FTC probe as a serious threat. But let’s talk about the actual users. That study claiming a potential $1,000 annual overcharge is the kind of number that makes people delete an app. Instacart’s whole defense—that it’s just the platform and retailers set prices—starts to look pretty thin when you’ve spent $59 million on an AI pricing company called Eversight. I mean, come on. You don’t buy a company like that to just passively display a grocer’s static price list. You buy it to dynamically *influence* pricing and promotions, which is exactly what their own filing said they wanted to do.
The AI Black Box Problem
Here’s the thing about using AI for pricing: it’s a regulatory minefield. The FTC is increasingly focused on so-called “dark patterns” and algorithmic fairness. If Instacart’s AI is optimizing for something—say, overall basket size or retailer profit margins—without clear disclosure, that’s a problem. It creates a “black box” where the consumer has no idea why they’re being shown one price versus another. Was it surge pricing? A personalized markup based on their shopping history? A promotion paid for by a brand? The lack of transparency is what the FTC will likely zero in on. And in an economy where everyone’s feeling the pinch at the grocery store, this is the worst possible look for Instacart.
A Broader Warning Shot
This isn’t just an Instacart story. It’s a warning to every platform that uses algorithms to tweak what consumers pay. The FTC is sending a message that “the algorithm made me do it” is not a valid defense. For enterprise clients and the supermarkets themselves who partner with Instacart, there’s a huge reputational risk. They might set the base price, but if a third-party’s AI is layering on mysterious variability, it reflects poorly on them too. Basically, the era of hiding behind complex tech to explain away pricing discrepancies is over. Regulators are now digging into the code, and the market is punishing the uncertainty. It’s a messy situation that’s about to get a whole lot more public.
