I've worked alongside some terrific general counsels at eBay, at HP through the Mark Hurd resignation, at LinkedIn through the IPO and most of what they told me to cut, I should have cut. But there's a kind of risk their job isn't built to weigh, and in most owner-led businesses nobody is assigned to it at all. Legal risk gets decided later, in a courtroom, by people who read everything. Reputational risk gets decided now, in public, by people who read the headline.
In October 2024, Kroger was weeks away from a federal judge's ruling on its $24.6 billion bid for Albertsons the biggest bet in the company's history. That's when Rep. Rashida Tlaib sent Kroger a letter that stitched two things together. One was electronic shelf tags, which let a store change prices instantly. The other was facial recognition, which had been reported as part of a 2019 pilot of Kroger's digital shelves. Her question: would Kroger combine the two to charge individual shoppers different prices based on who they were? Two senators had raised similar concerns that August.
To be clear, I have no idea what Kroger might do someday, and it wouldn't shock me to learn that someone there had considered it. But the construction was two true facts, years apart, arranged into an accusation. Microsoft, which had worked on the pilot, later said Kroger wasn't using its facial recognition technology and that the shelf tags in stores weren't the technology it had piloted in 2019. The coverage ran anyway CBS, Gizmodo, USA Today.
Kroger's statement, which ran in most of the coverage, started with its business model "built on a foundation of lowering prices" and then got to the point: "Kroger does not and has never engaged in 'surge pricing.' Any test of electronic shelf tags is designed to lower prices for more customers where it matters most. To suggest otherwise is not true."
Credit where it's due: it denied the charge, and it did it without sounding rattled. What it never did was touch the other half. No word on facial recognition, and nothing on the fact that the two things being welded together came from different eras. It answered the accusation instead of the construction.
My guess at the time and it's a guess was that somebody on the communications team wanted to take the timeline apart, and legal killed it to keep options open during the trial. That's a defensible legal call. It's a costly reputational one, and the fact that it was probably the right call for the courtroom is exactly why somebody else needs to be in the room.
I won't pretend the letter sank the deal. The judge blocked the merger in December on antitrust grounds, and Albertsons walked away and sued Kroger the next day. None of that was about shelf tags.
The cost is quieter and it lasts longer. "Kroger," "facial recognition" and "surge pricing" now sit next to each other in coverage from national outlets, with a statement that disputes one of the three words. That coverage doesn't expire, and it's exactly what gets retrieved when anyone a shopper, a reporter, a regulator, a machine asks what Kroger does with customer data.
Now shrink it. You own a four-office dental group. Last year you took on a private equity partner to fund two new locations. This year you raised fees for uninsured patients, because your costs went up. Both true, both unrelated. A local reporter, or a viral post, puts them in the same sentence: "Private equity takes over local dentist, patients pay more." Your attorney's advice is a short statement that you don't comment on business arrangements. Legally clean. Publicly, the silence reads as confirmation, and "PE-owned practice raising prices" becomes the first thing people read about you.
Kroger needed one more sentence, specific and checkable: these are two different things, reported years apart; the facial recognition pilot ended; we have never used facial recognition to price anything. Every word of that could be verified, which is precisely what would have made it land.
For an owner-led business:
The machines raise the stakes here, because building answers out of fragments is literally what they do. Ask an AI assistant about your practice and it will pull a sentence from a news story, a line from a review and a figure from your website, and put them side by side. If nobody ever took a conflation apart on the record, the conflation becomes the summary. If there's a clear, dated page explaining the two facts, there's something for the machine to cite instead.
Your lawyer is protecting you from the lawsuit. Make sure someone is protecting you from the headline.
Adapted from a piece first published October 23, 2024.
