Gas giants use AI to raise prices, lawsuit says, another algorithmic hit to the cost of living

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Set us as preferred A federal lawsuit alleging that gas companies in California are colluding to keep prices high through their use of AI-powered software will test the state’s antitrust law at a time of growing concerns about the effects of technology on the high cost of living.Filed on behalf of three drivers last week, the proposed class-action lawsuit accuses roughly a dozen companies and their subsidiaries — including Walmart and 7-Eleven — of using algorithmic software to fix prices.The company that provided the software, Kalibrate, is named as a defendant.

Kalibrate’s program, according to the lawsuit, encourages gas stations to upload private price data.The company’s AI-powered software, called Kalibrate Fuel Prices, then uses the data to recommend prices in real time, promising in its marketing materials to help gas companies “squeeze out profit.”The lawsuit touches on a growing conversation over how companies are using technology, including AI, to push prices higher.In a highly publicized case in 2024, the federal government sued a company whose algorithmic pricing software was used by large landlords to share private rental data, recommend prices and drive apartment rents up.

Last year, reporters found that the grocery delivery company Instacart was running AI-enabled pricing experiments on customers, sometimes resulting in a nearly $3 difference in the price of individual products.“I wouldn’t be surprised if [this kind of individualized pricing] exists in all different kinds” of industries,said Robert Zeithammer, a professor at UCLA’s Anderson School of Management.

“If you’re a car dealer, you could be doing it.”Lawyers in the gas station lawsuit assert that technology is enabling antitrust violations.Even if companies didn’t communicate their pricing strategies to one another directly, the argument goes, the software is allowing them to share data and keep prices ab...