Three Algorithms in a Room

A growing number of industries, inspired by the airline industry's history of price-fixing, are now turning to algorithmic pricing to set prices collectively. This practice started with the Airline Tariff Publishing Company (ATPCO) in the 1980s, which shared fare information among airlines. Despite facing legal challenges from the Department of Justice (DOJ) in the 1990s, ATPCO continued its operations with minor modifications. The rise of algorithmic pricing intermediaries in various sectors like housing, agriculture, and healthcare has prompted new antitrust regulators to take action. The DOJ and FTC are now actively pursuing lawsuits against algorithmic price-fixing schemes, aiming to prevent collusion facilitated by machine-learning algorithms. The debate over antitrust enforcement approaches, shifting from consumer welfare to broader anti-competitive considerations, is ongoing. RealPage, a company founded by a former ATPCO executive, is at the center of allegations for revolutionizing pricing in real estate through algorithmic price-fixing, leading to higher rents and market power in several cities. The outcome of these lawsuits and regulatory actions could significantly impact the future of algorithmic pricing practices across industries.