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California, New York Latest States to Pass Laws Limiting Algorithmic Pricing

By  |  October 30, 2025

States are once again stepping in where Congress is yet to tread, this time involving the use of competitive pricing algorithms. California and New York are the latest to enact legislation aimed at banning or curbing the use of algorithmic pricing models by retailers, landlords and service providers to collude in setting prices.

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    More than 30 similar bills had been introduced in statehouses nationwide as of July 2025, according to an analysis by Consumer Reports.

    California’s AB 325 amends the Cartright Act, the state’s main antitrust law, to prohibit any agreement among competitors to use a “common pricing algorithm.” The law defines “common pricing algorithm” as software or other technology that two or more people use which ingests competitor data to recommend, align, stabilize, set, or otherwise influence a price or commercial term.

     The law, which applies to both sellers and users of pricing algorithms, also lowers the pleading standard for civil claims of collusion or coordination.

    The New York law, AB 1417, is more narrowly focuses on the housing market. It makes it a violation to facilitate an agreement between two or more landlords not to compete with respect to residential apartments, including by using an algorithmic pricing software to coordinate.  It also bans the use of an algorithm to set “lease renewal terms, occupancy, levels, or other lease terms and conditions.”

    While more than 50 bills addressing a range of uses of pricing algorithms have been introduced around the county, those focused on collusion among sellers and providers have gained the most traction in statehouses, according to an analysis by attorneys at Davis Polk.

    Other bills have addressed surveillance pricing, in which an algorithm is used to set customized prices for individual consumers based on their behavior, location, biometrics and other personal data, and dynamic pricing, in which an algorithm adjusts prices in real time based on factors like current demand and time.

    Read more: Canada Urged to Hold Off on Cartel Rules for Algorithmic Pricing

    To date, eight states have passed laws addressing dynamic pricing in various contexts, per Davis Polk, while New York is the only state so far to pass a law prohibiting surveillance pricing.

    As with AI and data privacy, Congress is yet to act on the use of pricing algorithms, leaving the field open for states. The one federal bill to address their anti-competitive use was the Preventing Algorithmic Collusion Act (PACA), introduced by Sen. Amy Klobuchar (D-MN) in early 2025, which would make it unlawful “to use or distribute any pricing algorithm that uses, incorporates, or was trained with nonpublic competitor data.”

    That bill is yet to receive a vote in the Judiciary Committee.

    The use of pricing algorithms has also increasingly been a target of litigation, with lawsuits filed over their use in housing rental prices, hotels and health insurance. None of these cases has yet gone to trial, however, and there are only a few decisions on motions to dismiss.

    “The outcomes of the cases have also diverged, with some courts dismissing the complaints and others allowing the cases to proceed to discovery, and with some courts finding that pricing algorithms should be treated as per se unlawful and others finding that they should be evaluated using the rule of reason,” according to the Davis Polk attorneys.