Assembly Bill 325, recently introduced in California, aims to amend the Cartwright Act to address concerns regarding common pricing algorithms that can potentially violate antitrust laws. The bill seeks to clarify that it would be illegal for businesses to use shared pricing algorithms to collude indirectly on pricing, thus strengthening enforcement against price fixing in a digital economy. Additionally, it lowers the burden of proof required to establish a violation under the Cartwright Act, allowing complaints to proceed with plausible evidence rather than clear intent to conspire.
Proponents, including Attorney General Rob Bonta, argue that this legislation is crucial to protect consumers from artificially high prices resulting from algorithmic collusion. Critics, particularly from business advocacy groups, warn that the bill could discourage companies, especially small businesses lacking resources, from utilizing pricing algorithms altogether due to fear of legal repercussions. They argue that this might hinder competitive practices rather than promote them.
The debate surrounding AB 325 underscores a larger issue in California—finding a balance between fostering innovation and safeguarding against anti-competitive behaviors in an increasingly algorithm-driven marketplace. As the bill moves to a critical vote in the Senate, its potential implications for consumer prices and the operational landscape for California businesses are significant. The outcome may set a precedent for how technology firms operate within the state and how antitrust laws are applied in the era of AI and machine learning.