A new federal lawsuit alleges that gas station companies across California are engaged in an illegal conspiracy, powered by AI software, to raise prices.
When I read this headline about gas stations using AI to inflate prices, I thought right away about RealPage and landlords colluding to drive up rents. Different industry, same tactics...and no less brazen, either. I hope this lawsuit succeeds and that it serves as a model for other similar proceedings in the future.
One of my favorite axioms is "the purpose of competition is to eliminate competition". In this case, not the competitors, but the act of competition. This is how capitalism curdles into corporate cartels, and democracy into oligarchy--through mergers, collusion, bribery, and tax cuts.
This is the dark side of AI... welcome to "big brother's evil twin". Market manipulation is a lava flow scorching what was fertile land. Good for California's AB325, getting ahead of the inevitable that is erupting both where we'd predict and not think to protect ourselves.
Thanks for this heads up on Kalibrate and RealPage. Writing to my representatives to see if our state is following this legislative path. Judd, you are doing such good work!
It feels like no human being is involved except at the cash register. Machines deciding gas prices? Insurance eligibility? How about testing children to see if they will be successful in life, at say, 5 years old, and then tracking them downward accordingly? Sure, keep buying the oligarch's slop. Keep lauding "some" AI. Keep believing that the richest are the smartest. Keep imagining that they have your best interest in mind.
More great reporting but referring to Kalibrate or RealPage as AI software is incorrect. There is nothing in either that requires AI capabilities. Nor is Kalibrate much different from the consumer site, Gas Buddy, in the structure of its data. There is nothing technically difficult that Kalibrate is doing. What it simply does is provide a platform for indepent actors to collude on price without having to talk directly with each other. Simple business model for obviously illegal behavior. The lawsuit seems likely to win on summary judgement.
Just visited Kalibrate's website. It has been around since 1970! It is definitely not an AI company. Its business is primarily helping chain store companies in many different industries make better decisions on opening new locations by assembling competitive data in that area to estimate potential sales volumes for hardware stores like Home Depot (50 year customer), 5 Guys (burgers), medical companies, etc. The use of their data to collude on prices might be something newer, I did not read that far into the site. But 1) it is not simply about gas stations, and 2) it is mostly a long time business consultancy using competitive data to legitimately help make better location decisions.
No one (other than competitors) wants a business to fail by being unable to make a profit. If the investors weren’t making so much while so many people struggle to survive, there would be no complaint. But extreme income inequality is destroying society. And I’m not blaming the individual franchise holder, the single gas station owner, who gets very little from gasoline sales. It’s the corporate owners who are raking it in. The one who actually owns the building and runs the store may be making 3¢ a gallon, the corporation 10-20 times that.
Capitalism is like fire. It is very useful as long as it is controlled. When fire escapes the fireplace, the house burns down. When capitalism escapes the law, you get the mafia.
I guess it’s not surprising that other industries are now doing what RealPage enabled landlords to do, though I am surprised that they don’t seem to see that what they’re doing is obviously collusion. What isn’t surprising is that the Trump admin isn’t doing anything about it, as I’m sure they’re getting a taste, and they will likely try to intervene on behalf of the lawbreakers as they have in similar situations. Corruption is the only actual fixed value Trump has.
Does "America, the land of opportunity" mean you have a right to make as much money as you can as fast as you can by skirting the law in any ingenious way you can come up with? I suppose it depends on who you ask...
We have twice gotten different prices on the same item on Amazon based on account: one has Prime and one does not. Surprise! The price on Prime was higher and they both came with free shipping. Amazon customer service 1) denied this could be true until I sent screen prints 2) Then said it must be a glitch.
My brother worked in the automobile repair business for decades. He told me that gasoline, like groceries, has a very low profit margin and that gas is priced not on how much it cost to fill the station's tanks but on his much it costs to replace the gas they sell that day. I don't know if that is still true, and I've seen places that seem to be gouging, but it seems to me like the govt might be making a mistake here and responding to another Trump directive.
Has not been true for a long time. The industry has consolidated and the margins at the pump, measured in cents per gallon, have risen steadily. OPIS is the national source for data on pump margins.
When I read this headline about gas stations using AI to inflate prices, I thought right away about RealPage and landlords colluding to drive up rents. Different industry, same tactics...and no less brazen, either. I hope this lawsuit succeeds and that it serves as a model for other similar proceedings in the future.
My first thought as well.
One of my favorite axioms is "the purpose of competition is to eliminate competition". In this case, not the competitors, but the act of competition. This is how capitalism curdles into corporate cartels, and democracy into oligarchy--through mergers, collusion, bribery, and tax cuts.
Oh for the days when antitrust enforcement was considered a duty of government!
...and enforcement of the Constitution was something you could take for granted!
This is the dark side of AI... welcome to "big brother's evil twin". Market manipulation is a lava flow scorching what was fertile land. Good for California's AB325, getting ahead of the inevitable that is erupting both where we'd predict and not think to protect ourselves.
Thanks for this heads up on Kalibrate and RealPage. Writing to my representatives to see if our state is following this legislative path. Judd, you are doing such good work!
It feels like no human being is involved except at the cash register. Machines deciding gas prices? Insurance eligibility? How about testing children to see if they will be successful in life, at say, 5 years old, and then tracking them downward accordingly? Sure, keep buying the oligarch's slop. Keep lauding "some" AI. Keep believing that the richest are the smartest. Keep imagining that they have your best interest in mind.
More great reporting but referring to Kalibrate or RealPage as AI software is incorrect. There is nothing in either that requires AI capabilities. Nor is Kalibrate much different from the consumer site, Gas Buddy, in the structure of its data. There is nothing technically difficult that Kalibrate is doing. What it simply does is provide a platform for indepent actors to collude on price without having to talk directly with each other. Simple business model for obviously illegal behavior. The lawsuit seems likely to win on summary judgement.
Just visited Kalibrate's website. It has been around since 1970! It is definitely not an AI company. Its business is primarily helping chain store companies in many different industries make better decisions on opening new locations by assembling competitive data in that area to estimate potential sales volumes for hardware stores like Home Depot (50 year customer), 5 Guys (burgers), medical companies, etc. The use of their data to collude on prices might be something newer, I did not read that far into the site. But 1) it is not simply about gas stations, and 2) it is mostly a long time business consultancy using competitive data to legitimately help make better location decisions.
No one (other than competitors) wants a business to fail by being unable to make a profit. If the investors weren’t making so much while so many people struggle to survive, there would be no complaint. But extreme income inequality is destroying society. And I’m not blaming the individual franchise holder, the single gas station owner, who gets very little from gasoline sales. It’s the corporate owners who are raking it in. The one who actually owns the building and runs the store may be making 3¢ a gallon, the corporation 10-20 times that.
Totally agree, Stan, but it might be worth noting that nationally the average margin at the pump last week was 50 cents a gallon according to OPIS.
Capitalism is like fire. It is very useful as long as it is controlled. When fire escapes the fireplace, the house burns down. When capitalism escapes the law, you get the mafia.
I guess it’s not surprising that other industries are now doing what RealPage enabled landlords to do, though I am surprised that they don’t seem to see that what they’re doing is obviously collusion. What isn’t surprising is that the Trump admin isn’t doing anything about it, as I’m sure they’re getting a taste, and they will likely try to intervene on behalf of the lawbreakers as they have in similar situations. Corruption is the only actual fixed value Trump has.
Does "America, the land of opportunity" mean you have a right to make as much money as you can as fast as you can by skirting the law in any ingenious way you can come up with? I suppose it depends on who you ask...
Dynamic pricing is real.
We have twice gotten different prices on the same item on Amazon based on account: one has Prime and one does not. Surprise! The price on Prime was higher and they both came with free shipping. Amazon customer service 1) denied this could be true until I sent screen prints 2) Then said it must be a glitch.
Hopefully this is still a legit website: https://lifehacker.com/how-web-sites-vary-prices-based-on-your-information-an-5973689
" Under the Trump administration, the DOJ settled its case against RealPage in exchange for some modest reforms on how the software operates. "
Surprise! I wonder if there are kickbacks...
My brother worked in the automobile repair business for decades. He told me that gasoline, like groceries, has a very low profit margin and that gas is priced not on how much it cost to fill the station's tanks but on his much it costs to replace the gas they sell that day. I don't know if that is still true, and I've seen places that seem to be gouging, but it seems to me like the govt might be making a mistake here and responding to another Trump directive.
Has not been true for a long time. The industry has consolidated and the margins at the pump, measured in cents per gallon, have risen steadily. OPIS is the national source for data on pump margins.
Thanks for the update. I can now let that little piece of trivia go. lol
Gas pumps always start charging $ well before the gas flows, too. This has been going on long time and is getting worse. Many pennies' worth.
Definitely trying to break the middle class.