Yesterday, California Governor Gavin Newsom signed new legislation, AB 325 (Agular-Curry), to ban algorithmic price fixing. The new law prohibits corporations from using algorithms and digital tools to manipulate the prices on essentials such as rent and groceries.
Advocates of the law called AB 325 “groundbreaking” and said it’s a “critical step in addressing California’s affordability crisis by cracking down on tech-enabled price manipulation.”
“Californians are fed up with corporations using secret algorithms to jack up prices on everything from rent to groceries, from hotel rooms to french fries,” Teri Olle, Director of Economic Security California Action (ESCAA) and a co-sponsor of the bill, said. “Whether it’s RealPage’s software allegedly costing renters an additional $3.8 billion in 2023 alone, or potato companies and meatpackers using shared data to coordinate price increases, these digital price collusion schemes are making life unaffordable for working families across our state.”
RealPage, a property management software, is one example of a company using pricing algorithms that drove rent up in many cities across the U.S. by enabling landlords to “collude in price-fixing schemes” Rent increased up to 20 percent in the San Francisco Bay Area, ESCAA reported.
The legislation makes it illegal for companies to use “software to engage in the same price-fixing schemes” and puts in place antitrust protections for the digital and AI era throughout California.
“The principle driving AB 325 is simple: if it’s illegal in a back room, it’s illegal on a laptop. This new law will directly confront the tech-powered price crisis by holding accountable both the developers who create price-fixing algorithms and the companies that knowingly use them,” Olle said. “It’s about restoring real competition to our markets and ensuring technology delivers prosperity for all, rather than padding corporate executives’ pockets.”
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