Instacart shares drop on report that FTC is probing company over AI pricing tool

Shares of grocery delivery service Instacart dropped about 7% in extended trading on Wednesday, following a report that said the U.S. Federal Trade Commission has begun an investigation into the company’s pricing practices.

The FTC sent a civil investigative demand to Instacart, Reuters reported, citing unnamed people.

“The Federal Trade Commission has a longstanding policy of not commenting on any potential or ongoing investigations,” the FTC told CNBC in a statement. “But, like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practice.”

A study released last week showed that prices for the same products in the same supermarkets that work with Instacart can vary by around 7%, which can result in over $1,000 in extra annual costs for customers. Instacart responded by saying that retailers determine prices listed in the app.

In 2022, Instacart spent $59 million to acquire Eversight, a company specializing in artificial intelligence-driven pricing and promotions for retailers and consumer packaged goods. Instacart sought to “create compelling savings opportunities for customers in real-time” with Eversight, according to a regulatory filing.

Earlier on Wednesday, Robert Garcia, a U.S. House Democrat from California, sent a letter to Instacart CEO Chris Rogers asking for a report on how the company sets prices.

“It is unconscionable that corporations are adding to Americans’ financial strain with algorithmic — and potentially surveillance — pricing,” wrote Garcia, who is ranking member of the House Committee on Oversight and Government Reform.

Instacart did not immediately respond to a request for comment.

— CNBC’s Annie Palmer contributed to this report

Read Reuters’ full report here.