California Preventing Algorithmic Collusion Act of 2025.

Senator Hurtado's California Preventing Algorithmic Collusion Act of 2025 establishes new restrictions on pricing algorithms that process competitor data. The legislation prohibits distributing pricing algorithms to multiple competitors or using algorithmic recommendations when the system processes confidential market information from competing businesses.

The bill defines pricing algorithms as any computational process, including machine learning and artificial intelligence systems, that recommends or sets prices or commercial terms within California. These terms encompass service levels, availability, output quantities, discounts, and property rental rates. Under the new provisions, each instance of distributing an algorithm to an authorized user, making a recommendation, or using such a system for a calendar month constitutes a separate violation. The restrictions do not apply when all processed competitor data is more than one year old.

The legislation authorizes the Attorney General, district attorneys, county counsels, and city attorneys to pursue civil enforcement actions. Available remedies include restitution, punitive damages, civil penalties up to $25,000 per violation, and injunctive relief. Courts must consider factors like violation severity, persistence, willfulness, and cooperation when determining penalties. The bill provides an affirmative defense for entities that exercise reasonable due diligence, such as obtaining written assurances that algorithms do not process competitor data.