AI Pricing Algorithm

State of play.

• DOJ has escalated algorithmic pricing from civil enforcement to explicit criminal liability warnings. Acting Deputy AAG Daniel Glad stated at the Antitrust West Coast Conference that software "cannot launder collusion" and that algorithmic conduct falls within criminal antitrust reach — building on the RealPage civil settlement and prior hotel-sector statements of interest .
• The RealPage settlement remains the governing civil enforcement template, prohibiting competitor-data use in pricing models, mandating a court monitor, and pending Tunney Act review — no financial penalties, no liability admission, but a compliance architecture that defines the floor .
• State legislative activity has reached a structural inflection point. Colorado has advanced a first-in-nation bill banning both surveillance pricing and algorithmic wage-setting; California AB 325 is already operative; and more than 40 bills across at least 24 states are in play — creating a multi-state compliance obligation before any federal preemption framework exists .
• Defense-side motions practice is producing dismissals. King & Spalding's wins in the Six Continents Hotels price-fixing class action and ECI Management MDL signal that courts are scrutinizing the factual sufficiency of software-driven coordination theories at the pleading stage .
• For counsel advising companies that deploy algorithmic pricing, use shared pricing software, or procure AI tools, the practical baseline is a three-front exposure: criminal antitrust risk from competitor data flows, a fragmenting state regulatory landscape with conflicting prohibitions, and contract risk from AI vendor pricing structures where measurement methodologies remain undefined.

Where things stand.

• DOJ's criminal enforcement posture is explicit. The Antitrust Division has stated that algorithmic pricing tools generate documentary evidence — logs, timestamps, data-sharing records — that can establish intent and coordination more readily than traditional collusion, and that criminal liability attaches where competitors knowingly shared sensitive nonpublic data or used a common algorithm with a collective understanding to follow its recommendations .
• DOJ's RealPage settlement is the governing civil enforcement template. The settlement requires RealPage to stop using competitors' nonpublic data, limit model training to historical data at least 12 months old, and restrict geographic granularity to the state level — with a court monitor and Tunney Act review still pending .
• California AB 325 is already operative. Effective January 2026, it prohibits pricing algorithms that rely on competitor data — the first hard statutory prohibition at the state level .
• Colorado has advanced the most expansive state prohibition to date. House Bill 26-1210 would ban individualized pricing and wage-setting based on personal data through algorithmic systems, with exemptions for transparent non-discriminatory pricing and certain insurance or credit decisions — if enacted, it would be the first state to cover both practices simultaneously .
• The FTC's Section 6(b) surveillance pricing study, initiated in 2024, remains active. FTC leadership has told Congress that staff work continues and the agency is considering disclosure requirements for highly personalized, data-driven pricing; the House Oversight Committee has launched a parallel investigation targeting travel and platform companies .
• Regulators are drawing a line between traditional dynamic pricing and surveillance pricing. Market-condition-based dynamic pricing remains lawful; pricing tied to individual consumer data is the enforcement target — but the line is not yet defined by statute or final rule at the federal level .
• Federal legislative proposals are in play. The One Fair Price Act, introduced by Senators Gillibrand, Gallego, and Booker, would ban surveillance pricing nationally .
• Defense-side motions practice is producing results. The Six Continents Hotels dismissal and ECI Management MDL defense reflect courts scrutinizing whether factual allegations of software-driven coordination survive pleading standards — a meaningful data point for companies defending algorithmic pricing suits .
• AI software contract architecture is in transition. The shift from per-seat to consumption-based pricing — confirmed across roughly 40 companies in a Goldman Sachs analysis — means enterprise AI contracts now carry variable cost exposure with measurement methodologies that vendors have not yet standardized .
• Antitrust scrutiny is extending beyond real estate. Healthcare, hospitality, retail, and grocery sectors are identified enforcement targets; the RealPage settlement is explicitly framed as a signal to other industries .

Latest developments.

• DOJ Antitrust Division signals criminal enforcement risk for shared pricing software and AI-driven revenue management systems; Acting Deputy AAG Glad states software "cannot launder collusion" and that algorithmic conduct falls within criminal antitrust reach .
• Colorado advances House Bill 26-1210, a first-in-nation prohibition on both surveillance pricing and algorithmic wage-setting using personal data, with support from Economic Liberties, EPIC, and the AI Now Institute .
• King & Spalding's Lohr Beck named a Law360 Rising Star for defense-side wins in algorithmic pricing litigation, including dismissal of the Six Continents Hotels nationwide price-fixing class action and defense in the ECI Management MDL involving algorithmic revenue management software .

Active questions and open splits.

• What conduct triggers criminal vs. civil antitrust liability for algorithmic pricing? DOJ has stated criminal exposure attaches to knowing data-sharing and collective algorithm use, but the factual threshold distinguishing criminal coordination from independent algorithm adoption remains subject to case-by-case development — no criminal charges have been filed .
• Vendor liability vs. customer liability for algorithmic collusion. RealPage targeted the software vendor; enforcement posture toward customers who used the software remains less defined. Whether customers of shared pricing platforms face independent Sherman Act exposure — civil or criminal — is an open question across sectors .
• Where does dynamic pricing end and surveillance pricing begin? Regulators have articulated a distinction between market-condition-based pricing and consumer-data-driven individualized pricing, but no federal statute or final rule defines the line — leaving companies operating in the gap .
• How will conflicting state regimes interact? California AB 325 is operative; Colorado's bill would extend prohibition to wages; more than 40 bills across 24 states are in play. Companies operating nationally face potentially irreconcilable compliance obligations before any federal preemption framework exists .
• Will Colorado's bill and similar state bans survive constitutional challenge? A state ban on surveillance pricing and algorithmic wage-setting raises commerce clause, First Amendment, and federal preemption questions — particularly if the One Fair Price Act or FTC rulemaking moves in parallel .
• What factual allegations survive motions to dismiss in algorithmic coordination cases? The Six Continents Hotels dismissal and ECI Management defense suggest courts are applying meaningful scrutiny at the pleading stage, but the doctrine is unsettled — and what distinguishes a dismissed complaint from a surviving one is not yet clearly defined .
• What contract protections are adequate for consumption-based AI pricing? Measurement methodologies for "agentic work units" and token-based billing are undefined by vendors; cost caps, audit rights, and dispute mechanisms are not yet standard .

What to watch.

• Whether DOJ files a criminal charge or opens a formal criminal investigation in an algorithmic pricing matter — the first such action would define the evidentiary standard and reshape compliance calculus across hospitality, rental, retail, and healthcare .
• Colorado HB 26-1210 enactment and any immediate constitutional challenge — if enacted, it becomes the model for other states and the trigger for commerce clause litigation .
• Tunney Act review outcome for the RealPage settlement — whether the court imposes additional conditions beyond the proposed consent decree, and when the court monitor's scope is detailed in public filings .
• FTC action following its Section 6(b) study — whether the agency issues disclosure requirements, enforcement actions, or a rulemaking targeting surveillance pricing .
• Whether DOJ brings a second civil or criminal algorithmic pricing enforcement action in healthcare, hospitality, or retail — the sectors explicitly flagged as next in line .
• Emergence of standard contract terms for consumption-based AI pricing — whether any major vendor publishes defined measurement methodologies or whether enterprise buyers begin demanding audit rights and cost caps as a negotiating baseline .