WHAT THIS BILL REGULATES · 3 REQUIREMENT TYPES
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
This chapter shall be known, and may be cited, as the "California Preventing Algorithmic Collusion Act of 2024."
This section establishes the short title of the chapter as the "California Preventing Algorithmic Collusion Act of 2024." It creates no compliance obligations.
For purposes of this chapter, the following definitions apply:
(a) "Antitrust lawsAntitrust laws"Antitrust laws" has the same meaning as defined in the Clayton Act (15 U.S.C. Sec. 12), and includes Section 45 of Title 15 of the United States Code, and this part, including provisions commonly known as the Cartwright Act (Chapter 2 (commencing with Section 16700)).Bus. & Prof. Code § 17371(a)" has the same meaning as defined in the Clayton Act (15 U.S.C. Sec. 12), and includes Section 45 of Title 15 of the United States Code, and this part, including provisions commonly known as the Cartwright Act (Chapter 2 (commencing with Section 16700)).
(b) "Commercial termCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b)" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.
(c) "DistributeDistribute"Distribute," "distribution," and "distributing" include selling, licensing, providing access to, or otherwise making available by any means, including through a subscription or the sale of a service.Bus. & Prof. Code § 17371(c)," "distribution," and "distributing" include selling, licensing, providing access to, or otherwise making available by any means, including through a subscription or the sale of a service.
(d) "Nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data that is derived from or otherwise provided by another person that competes in the same market as a person, or a related market. "Nonpublic competitor data" does not include information distributed, reported, or otherwise communicated in a way that does not reveal any underlying data from a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results.Bus. & Prof. Code § 17371(d)" means nonpublic dataNonpublic data"Nonpublic data" means information that is not widely available or easily accessible to the public, including information about prices, commercial terms, and related products or services, regardless of whether the data is attributable to a specific competitor or anonymized.Bus. & Prof. Code § 17371(e) that is derived from or otherwise provided by another personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) that competes in the same market as a personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f), or a related market. "Nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data that is derived from or otherwise provided by another person that competes in the same market as a person, or a related market. "Nonpublic competitor data" does not include information distributed, reported, or otherwise communicated in a way that does not reveal any underlying data from a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results.Bus. & Prof. Code § 17371(d)" does not include information distributed, reported, or otherwise communicated in a way that does not reveal any underlying data from a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results.
(e) "Nonpublic dataNonpublic data"Nonpublic data" means information that is not widely available or easily accessible to the public, including information about prices, commercial terms, and related products or services, regardless of whether the data is attributable to a specific competitor or anonymized.Bus. & Prof. Code § 17371(e)" means information that is not widely available or easily accessible to the public, including information about pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g), commercial termsCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b), and related products or services, regardless of whether the data is attributable to a specific competitor or anonymized.
(f) "PersonPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f)" has the same meaning as defined in Section 16702.
(g) "PricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g)" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.
(h) "Pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h)" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b) within the jurisdiction of this state.
This section defines the key terms used throughout the chapter, including pricing algorithm, nonpublic competitor data, nonpublic data, price, and commercial term. The definition of pricing algorithm is notably broad, encompassing any computational process — including machine learning and AI techniques — that processes data to recommend or set a price or commercial term within California. The definition of price is also expansive, explicitly covering employee and independent contractor compensation, extending the bill's reach into wage-setting algorithms.
(a) 1 Upon written request by the Attorney General, a personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) shall, no later than 30 days after the date of the written request or any later date approved by the Attorney General, provide to the Attorney General a written report on each pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) identified in the request.
(b)(1)–(7) 1 Each report pursuant to subdivision (a) shall include all of the following: (1) Information on whether the personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) is responsible for the development or distribution of the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h), or whether a third party is responsible for the development or distribution of the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h), including the identity and contact information of any other personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) responsible for the development or distribution of the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h). (2) Information on whether the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) autonomously sets pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termsCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b) and whether there is human review of any recommendation or decision of the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h). (3) An explanation of the rules or processes that the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) uses to set or recommend pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termsCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b). (4) A description of all data the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) uses to set or recommend pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termsCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b), including data used to train the algorithm. (5) All sources and collection processes, including the frequency of collection, of any data that the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) uses to set or recommend pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termsCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b). (6) Whether the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) engages in pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) discrimination by setting or recommending different pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termsCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b) for the following: (A) Different customers seeking identical or nearly identical products or services, and if so, the factors used in differentiating among those customers. (B) Different employees or independent contractors providing substantially similar services, and if so, the factors used in differentiating among those employees or independent contractors. (7) Any changes made to the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) between the date of receipt of the request under subdivision (a) and the date of certification under subdivision (c).
(c) 1 The chief executive officer, chief economist, chief technology officer, or a corporate officer of similar authority of a personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) shall certify, under penalty of perjury, the accuracy of a report under subdivision (a) submitted by the personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f).
(d) All information submitted in a report under subdivision (a) shall be treated as confidential and shall be considered to be privileged and confidential trade secrets exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(e) Notwithstanding subdivision (d), the Attorney General may share the report pursuant to subdivision (a) with the National Institute of Standards and Technology for technical assistance in understanding the report if the National Institute of Standards and Technology agrees to refrain from disclosing the contents of a report shared under this subdivision or the analysis of the report by the National Institute of Standards and Technology to any personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f), except the office of the Attorney General.
(f) This section shall not be construed to do either of the following: (1) Limit the ability of the Attorney General to issue a civil investigative demand, to issue a subpoena, to seek discovery in the course of litigation, or to otherwise obtain information through other means available to the Attorney General. (2) Restrict the use of information submitted in a report under subdivision (a) in the course of a formal investigation, enforcement action, litigation, trial, or other proceeding, in accordance with the confidentiality procedures applicable to that proceeding.
This section creates a mandatory disclosure-on-demand regime: upon written request by the Attorney General, any person must produce within 30 days a detailed written report on each pricing algorithm identified in the request. The report must cover the algorithm's provenance (who developed and distributes it), autonomy level, decision rules, all data inputs and their sources, whether the algorithm engages in price discrimination across customers or workers, and any changes made between the date of request and certification.
Reports must be certified under penalty of perjury by a C-suite officer. All submitted information is treated as confidential trade secrets exempt from CPRA, though the AG may share reports with NIST for technical assistance and may use submitted information in formal investigations and litigation. The section explicitly preserves the AG's existing investigative tools.
(a) 2 A personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) shall not use or distributeDistribute"Distribute," "distribution," and "distributing" include selling, licensing, providing access to, or otherwise making available by any means, including through a subscription or the sale of a service.Bus. & Prof. Code § 17371(c) any pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) that uses, incorporates, or was trained with nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data that is derived from or otherwise provided by another person that competes in the same market as a person, or a related market. "Nonpublic competitor data" does not include information distributed, reported, or otherwise communicated in a way that does not reveal any underlying data from a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results.Bus. & Prof. Code § 17371(d).
(b) 2 If the Attorney General has reason to believe that a personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) has violated subdivision (a), the Attorney General may bring a civil action against the personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) in any court of competent jurisdiction in this state to seek to recover one or both of the following: (1) A civil penalty of one of the following: (A) Not less than ten thousand dollars ($10,000), adjusted for inflation on the basis of the California Consumer PricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) Index, for each day during which the violation occurs or continues to occur. (B) The sum of the price of each product or service sold using the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) in violation of subdivision (a). (2) Other appropriate relief, including an injunction or other equitable relief.
This section imposes a categorical prohibition: no person may use or distribute any pricing algorithm that uses, incorporates, or was trained with nonpublic competitor data. This is the bill's core anti-collusion provision — it targets the mechanism by which algorithmic pricing tools can facilitate horizontal coordination among competitors by pooling and processing their confidential pricing, supply, or commercial-term data.
Enforcement is exclusively through the Attorney General, who may seek civil penalties of at least $10,000 per day (CPI-adjusted) or the total price of each product or service sold via the violating algorithm, plus injunctive or other equitable relief.
(a)–(b) If the Attorney General meets the requirements of subdivision (b), there shall be, as applicable, the following presumptions: (1) The defendant entered into a contract in restraint of trade in violation of Chapter 1 (commencing with Section 16600). (2) The defendant entered into a contract, agreement, or trust in violation of Chapter 2 (commencing with Section 16700). (3) The defendant entered into a contract in violation of Chapter 4 (commencing with Section 17040). (b) The applicable presumptions described in subdivision (a) shall apply if the Attorney General establishes either of the following: (1) The defendant distributed the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) to two or more personsPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) with the intent that the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) be used to set or recommend a pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial term of a product or service in the same market or a related market and two or more personsPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) used the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) to set or recommend a pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial term of a product or service. (2) The defendant used the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) to set or recommend a pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial term of a product or service and the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) was used by another personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) to set or recommend a pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial term of a product or service in the same market or a related market.
(c) The presumptions under subdivision (a) shall not apply to a defendant if the defendant did not develop or distributeDistribute"Distribute," "distribution," and "distributing" include selling, licensing, providing access to, or otherwise making available by any means, including through a subscription or the sale of a service.Bus. & Prof. Code § 17371(c) the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) and the defendant demonstrates by clear and convincing evidence that the defendant did not have actual knowledge or could not have reasonably known that the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) used nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data that is derived from or otherwise provided by another person that competes in the same market as a person, or a related market. "Nonpublic competitor data" does not include information distributed, reported, or otherwise communicated in a way that does not reveal any underlying data from a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results.Bus. & Prof. Code § 17371(d).
(d) In a civil case in which a presumption described in subdivision (a) is applicable, any personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) that distributed the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) and knew, or could have reasonably known, that the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) would use, incorporate, or be trained with nonpublic competitor dataNonpublic competitor data"Nonpublic competitor data" means nonpublic data that is derived from or otherwise provided by another person that competes in the same market as a person, or a related market. "Nonpublic competitor data" does not include information distributed, reported, or otherwise communicated in a way that does not reveal any underlying data from a competitor, such as narrative industry reports, news reports, business commentaries, or generalized industry survey results.Bus. & Prof. Code § 17371(d) shall be jointly and severally liable for any violation of Chapter 1, 2, or 4.
(e) Nothing in this section shall impair or limit the applicability of antitrust lawsAntitrust laws"Antitrust laws" has the same meaning as defined in the Clayton Act (15 U.S.C. Sec. 12), and includes Section 45 of Title 15 of the United States Code, and this part, including provisions commonly known as the Cartwright Act (Chapter 2 (commencing with Section 16700)).Bus. & Prof. Code § 17371(a).
This section establishes evidentiary presumptions that facilitate antitrust enforcement against algorithmic collusion. If the Attorney General proves either that a person distributed a pricing algorithm to two or more competitors who used it to set prices in the same or related market, or that the person used a pricing algorithm also used by a competitor, the court presumes the person entered into a contract in restraint of trade under the Cartwright Act and related California antitrust statutes.
A safe harbor exists for end-users who did not develop or distribute the algorithm and can demonstrate by clear and convincing evidence that they lacked actual or constructive knowledge of the nonpublic competitor data. Distributors who knew or should have known of nonpublic competitor data use face joint and several liability. The section preserves existing antitrust law.
(a)(1)–(2) 3 A personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) that has five million dollars ($5,000,000) or more in annual revenue that uses a pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) to recommend or set a pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b) shall make, in a clear manner, the following disclosures: (1) To a customer, before the customer purchases the relevant product or service, that the pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or a commercial termCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b), as applicable, is set or recommended by a pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h). (2) To a current or prospective employee or independent contractor that the pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or commercial termCommercial term"Commercial term" means any of the following: (1) Level of service. (2) Availability. (3) Output, including quantities of products produced or distributed or the amount or level of service provided. (4) Rebates or discounts made available.Bus. & Prof. Code § 17371(b) for services rendered as an employee or independent contractor is set or recommended by a pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h).
(b)(1)–(2) 3 If applicable, a disclosure under subdivision (a) shall state that the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) sets or recommends different pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) for the following: (A) Different customers seeking identical or nearly identical products or services. (B) Employees or independent contractors providing substantially similar services. (2) If applicable, a disclosure under subdivision (a) shall do both of the following: (A) State that the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) was developed or distributed by a personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) other than the personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) making the disclosure. (B) Provide the identity of the personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) that developed or distributed the pricing algorithmPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h).
(c) 3 Failure to provide a disclosure under subdivision (a), including the information required under subdivision (b), shall constitute an unfair trade practice in violation of Chapter 4.
(d) 3 If the Attorney General has reason to believe that a personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) has violated subdivision (a) or (b), the Attorney General may bring a civil action against the personPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) in any court of competent jurisdiction in this state to seek to recover one or both of the following: (1) A civil penalty of not less than five thousand dollars ($5,000), adjusted for inflation on the basis of the California Consumer PricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) Index, for each day during which the violation occurs or continues to occur. (2) Other appropriate relief, including an injunction or other equitable relief.
(e) Nothing in this section shall impair or limit the applicability of antitrust lawsAntitrust laws"Antitrust laws" has the same meaning as defined in the Clayton Act (15 U.S.C. Sec. 12), and includes Section 45 of Title 15 of the United States Code, and this part, including provisions commonly known as the Cartwright Act (Chapter 2 (commencing with Section 16700)).Bus. & Prof. Code § 17371(a).
This section requires persons with $5,000,000 or more in annual revenue that use a pricing algorithm to recommend or set a price or commercial term to make clear disclosures to affected parties. Customers must be informed before purchase that the price or commercial term is set or recommended by a pricing algorithm. Current and prospective employees and independent contractors must likewise be told that their compensation is algorithmically set or recommended.
Where the algorithm engages in differential pricing — setting different prices for different customers seeking identical products or different compensation for workers providing substantially similar services — the disclosure must state that fact. If the algorithm was developed or distributed by a third party, the disclosure must identify that third party. Failure to comply constitutes an unfair trade practice under Chapter 4. The AG may seek civil penalties of at least $5,000 per day (CPI-adjusted) plus injunctive relief.
4 On or before January 1, 2027, notwithstanding Section 10231.5 of the Government Code, the office of the Attorney General shall publish on its internet website, and notify the Legislature of the publication of, the results of a study conducted in collaboration with the Governor's Office of Business and Economic Development and the Department of Financial Protection and Innovation on the use of pricing algorithmsPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) using, incorporating, or trained with either or both public and nonpublic dataNonpublic data"Nonpublic data" means information that is not widely available or easily accessible to the public, including information about prices, commercial terms, and related products or services, regardless of whether the data is attributable to a specific competitor or anonymized.Bus. & Prof. Code § 17371(e), including the following information: (a) The prevalence of pricing algorithmsPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h). (b) The frequency of the use of pricing algorithmsPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) to engage in pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g) or wage discrimination. (c) The potential for personsPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) to use pricing algorithmsPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) to engage in behavior that increases pricesPrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g), lowers wages, reduces output, lowers quality, deters innovation, or otherwise harms the competitive process outside of the pricePrice"Price" means the amount of money or other thing of value, whether tangible or not, expected, required, or given in payment for any product or service, including compensation paid to an employee or independent contractor for services provided.Bus. & Prof. Code § 17371(g)-fixing context. (d) The potential benefits or efficiencies of pricing algorithmsPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h). (e) Any industries, sectors, or markets in which pricing algorithmsPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h) may warrant additional oversight or regulation to protect competition and consumers. (f) Recommendations for additional legislation, regulation, or rulemaking relating to competition and consumer protection issues arising from the use of pricing algorithmsPricing algorithm"Pricing algorithm" means any computational process, including a computational process derived from machine learning or other artificial intelligence techniques, that processes data to recommend or set a price or commercial term within the jurisdiction of this state.Bus. & Prof. Code § 17371(h).
This section directs the Attorney General's office to publish by January 1, 2027 the results of a study conducted in collaboration with GO-Biz and the Department of Financial Protection and Innovation on the use of pricing algorithms. The study must cover algorithm prevalence, frequency of price and wage discrimination, potential for anticompetitive conduct beyond price-fixing, potential benefits, sectors warranting additional oversight, and recommendations for further legislation. This is a government study mandate, not a private-sector compliance obligation.
The Legislature finds and declares that Section 1 of this act, which adds Chapter 8 (commencing with Section 17370) to Part 2 of Division 7 of the Business and Professions Code, imposes a limitation on the public's right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest: To protect the privileged and confidential trade secrets and commercial or financial information of personsPerson"Person" has the same meaning as defined in Section 16702.Bus. & Prof. Code § 17371(f) submitting a written report, it is necessary to restrict the public's access to this information.
This section provides the constitutionally required findings under Article I, Section 3 of the California Constitution to justify the restriction on public access to reports submitted under § 17372. It does not create any compliance obligation.