- Volume 78, Issue 1
- Page 191
Note
Anticompetitive Interdependence in “Gullible” Pricing Algorithms
Gregory D. Schwartz *
Sellers across a wide range of industries increasingly delegate pricing decisions to computers. Their pricing algorithms can improve market efficiency by reacting immediately to changes in supply chains and market demand. But these programs can also aid and conceal harmful anticompetitive behavior. Under the Biden Administration, the Federal Trade Commission expanded the scope of antitrust enforcement and brought claims against such algorithms, even amid concerns that these actions would deter beneficial business conduct.
But to fully address the emerging risks from pricing algorithms, antitrust law would have to be pushed even further. While scholars and agencies scrutinize highly sophisticated artificial intelligence, little attention has been paid to another prevalent threat: simple, “gullible” pricing algorithms. With a few clicks, millions of online retailers can easily implement programs that automatically mimic competing prices. These algorithms—and others like them—can reliably collude on accident, without human agreement or intent. As such, they are common, anticompetitive, and outside the reach of even expanded conceptions of antitrust law.
This Note situates these gullible agents within antitrust literature, examining their prevalence and the challenges they pose to existing enforcement frameworks. As antitrust agencies continue to reassess the breadth of their authority, this Note argues that antitrust law is ill-suited to protect consumer welfare from gullible agents without threatening beneficial business conduct. This Note instead proposes that the users of pricing algorithms be subject to a duty of care regarding the gullibility of their systems.
* J.D., Stanford Law School, 2025. I am indebted to Mark A. Lemley and Christopher R. Leslie for their invaluable feedback. Many thanks to the diligent editors of the Stanford Law Review, especially Emily Pan, Peri Joy Long, Adalyn Richards, Kyle Melatti, Damian Richardson, Isabel Gallegos, Ryan Joel, Kuenhee Andy Lee, Anna McGuire, and Alexander Rivkin. I wrote this Note as a full-time student at Stanford Law School, and the opinions expressed are solely my own.