As courts and lawmakers across the U.S. figure out how to handle AI's rapid growth, California has sent a clear message: algorithm-driven collusion is fair game for antitrust enforcement. Starting January 1, 2026, California law prohibits using a shared pricing algorithm as part of an agreement to limit competition.1 Some see this update to the state's Cartwright Act as mostly restating what the law already covered. But a new ban on algorithmic pricing coercion could push some businesses to rethink how they are deploying AI into their businesses. Whether this amendment causes a small ripple or a major wave may come down to how courts read the law.
The amendment addresses algorithmic pricing in two ways. First, it bans using or distributing a "common pricing algorithm"—which the statute defines as technology that two or more entities use to recommend prices or commercial terms based on competitor data—as part of an agreement to restrain trade under the Cartwright Act. Second, it makes
