By Khari Johnson

WHAT THE BILL WOULD DO

Landlords, grocery stores, and tech platforms like Amazon, Airbnb and Instacart can use algorithms to rip you off in a variety of ways. To prevent businesses from charging customers higher costs and make life more affordable, Assembly Bill 325 would prohibit tech platforms from requiring independent businesses to use their pricing recommendations. Among half a dozen bills introduced this year to address the problem, it’s the only bill that made it to the governor’s desk. Key examples cited by author Cecilia Aguilar-Curry, a Davis Democrat, include Realpage, which sets the cost of apartment rentals, and Cendyn, a tool used by hotels to set prices, though a case against Las Vegas hotels for using that tool was recently thrown out.

WHO SUPPORTS IT

Lawmakers and supporters of the bill say algorithms eliminate fair market competition. In the past, businesses or competitors would go into a room and collude to increase the cost for a particular good, but today they can just use an algorithm, said Sen. Melissa Hurtado, a Democrat from Bakersfield, author of another algorithmic pricing bill that failed. Whether done by people in a room or with digital tools, price-fixing is wrong, said Aguilar-Curry, who has said she believes the algorithms play an important role in California’s affordability crisis. Attorney General Rob Bonta, prominent unions, and the Consumer Federation of California are among supporters of AB 325.

WHO IS OPPOSED

Groups representing apartment landlords, hospitals, hotels, restaurants, retailers, and tech industry groups oppose this legislation. The California Chamber of Commerce maintains that AB 325 will drive up costs.

WHY IT MATTERS

Across industries and markets, when centralized platforms set prices, we lose the competition that drives prices down, said Lee Hepner, a lawyer at the American Economic Liberties Project, who supports AB 325.

Such pricing practices have led to federal lawsuits against businesses like RealPage and Agri Stats, whose practices could have led to higher costs of meat in grocery stores. A 2024 White House study estimated that price-fixing algorithms cost apartment renters $3.8 billion in 2023, amounting to higher rents nationwide, including $99 more a month in San Diego, $62 more a month in San Francisco, and $34 a month more in Los Angeles. Lawmakers in nearly 20 states are considering regulation to prevent rent price fixing.

GOVERNOR’S CALL ✅