States Should Stop Trying to Regulate AI Pricing

Source Domain: www.governing.com

The artificial intelligence revolution is still in its infancy, yet many states are actively pursuing policies that will hobble innovation and competition in this space. One of the most problematic types of cumbersome and costly AI mandates involves efforts to regulate algorithmic pricing. Led by California and New York, more than 50 AI pricing bills across 24 state legislatures were introduced last year, each with their own unique definitions and compliance requirements. Many have already taken effect and many more are on the way.

With Congress unable to find a solution to the regulatory briar patch of rules and regulations state and local governments fomented around AI last year, 2026 is shaping up to be the year that the AI patchwork arrives. Algorithmic pricing generally and price controls specifically are at the center of the debate.

These laws have been an absolute mess. Algorithmic pricing definitions are broad enough to accidentally rope in happy-hour discounts, with other bills targeting specific sectors ranging from real estate to grocery stores. A bill in Maine would have banned changing prices when demand fluctuates in grocery stores and restaurants, undermining simple supply and demand responses.

In California, a much broader bill was introduced last year to ban using consumer data to change prices, an idea Tennessee recently imported. California lawmakers ended up enacting different, overly broad regulations to restrict the use of a “common pricing algorithm” to set even basic prices. The definitions are so broad — and its applications so vague — that the California law might “accidentally regulate effectively all market transactions,” in one expert’s view.

Then there’s New York. Last year, its Legislature passed the Algorithmic Pricing Disclosure Act, which requires companies to spout a government-written line on their products in the name of transparency. Following…

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