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Algorithms and Antitrust

By Ediberto Roman
June 01, 2024

Generally speaking, algorithms are procedures for solving mathematical problems in a systematized finite number of steps. In contemporary economic settings, algorithms involve technologies that, by aggregating and sorting through historical data, help service providers better understand market pricing in their respective industries. They have become instrumental to the modern-day digital economy. Market sectors such as the car rental industry, hotels, property managers, and even the government (i.e., for toll roads) are a few of the many economic actors presently utilizing algorithms that better serve their customers, ensure fair and reasonable pricing, and prevent excessive shortages and surpluses.

The economic benefits realized from generative AI are nothing short of astounding. Some estimates predict it will increase global gross domestic product by nearly $7 trillion and productivity growth by a full 1.5% over the next 10 years. That is why it is so concerning that the Department of Justice, the Federal Trade Commission, and a small choir of members of Congress seem intent on regulating algorithms away from the economy on antitrust grounds.

The action they have recently taken against RealPage, a software company whose algorithm helps inform property managers' pricing decisions, might be the first example of Washington's crusade against this technology, but more actions against similarly profiled algorithms will undoubtedly follow. The officials and politicians in question should become more informed and ultimately reconsider their stance. They are alleging with little facts that a company that provides statistical data to landlords is somehow violating antitrust laws violations. That is not how antitrust laws work. Data collection and prediction is not violative of any laws. In the end, consumers and the rest of society will suffer in the absence of these valuable AI-generative tools and others like it in other sectors.

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