AI PRICE-FIXING CREEPING INTO MORE INDUSTRIES; CURRENT LAWS MAY NOT BE ENOUGH TO STOP IT!
In an era of technological advancements and artificial intelligence (AI), could we be inadvertently paving the way for a new era of price fixing and undermining competitive markets? Allegations made in a series of lawsuits against RealPage, a company specializing in helping landlords set rental prices using AI, raise such concerns. The firm is being accused of playing a central role in a price-fixing conspiracy, which could potentially affect a significant proportion of the US housing market.
RealPage, which allegedly sets prices for an estimated 30 to 60 percent of multifamily-building units in 40 different US housing markets, finds itself at the heart of a revolutionary debate. Instead of falling into the traditional framework of collusion where entities directly agree to set prices, landlords are accused of outsourcing price-setting to an independent third-party, in this case, RealPage. The charge leveled against the firm suggests a coordinated lack of price competition among landlords.
The concept of "algorithmic collusion" isn’t exactly new; Maureen Ohlhausen, the chair of the Federal Trade Commission (FTC), had already warned against it in 2017. As more and more industries begin to deploy algorithms for price settings, the alarm bells should rightly sound off. Yet at present, the challenges are more complex than they may initially appear; existing antitrust laws may fall short in addressing this burgeoning issue of potential collusion and price fixing facilitated by AI assessments.
Therein lies the crux. The legal challenge lies not simply in proving that these companies have utilized the same third-party pricing system, but also in demonstrating the existence of agreements between companies opting for this method. The company, in its defense, is articulating that it merely offers pricing recommendations and landlords themselves make the final decisions.
While companies profit and optimize pricing strategies using advanced AI tools, the impact on consumers could be severe, particularly with an essential commodity such as housing. This emerging landscape threatened by algorithmic machinations could potentially lead to escalated costs for consumers in an already strained housing market and impede incentives for businesses to innovate and lower prices, thereby further tightening the screw of affordability.
It is clear that the impact of this scenario on the future is nuanced. Some experts suggest that the solution may encompass updating existing laws to reflect the changing reality of the digital age, while others propose that local governments introduce their own rulings to tackle this issue.
These developments raise pertinent questions: How can laws keep pace with rapid technological growth? How can we ensure competition and consumer protection in a world increasingly led by algorithms? These are the questions that policy makers, lawmakers and innovators need to grapple with as they shape the future trajectory of digital economies. These lawsuits could potentially catalyze a broader systemic change, sculpting a new legal landscape that keeps up with evolving realities of tech applications in our daily lives.Autr