What is the method of circumventing the law by manipulating market prices, which is supposed to be illegal, through an app?
Pluralistic: It's not a crime if we do it with an app (25 Jan 2025) – Pluralistic: Daily links from Cory Doctorow
https://pluralistic.net/2025/01/25/potatotrac/#carbo-loading
In recent years, prices of various products have risen due to inflation, the reasons for which include the COVID-19 pandemic, Russia's invasion of Ukraine, and rising raw material costs. Normally, price competition between competitors would occur at the stage of cost increases, but in reality, there are many cases where multiple companies raise prices in unison.
Doctorow argues that in some sectors where a small number of companies have a large market share, companies form cartels and collude to raise prices to make profits. In this case, Doctorow focuses on the frozen potato industry, where 97% of the market is controlled by four companies: Lamb Weston , JR Simplot , McCain Foods , and Cavendish Farms .
These companies had been gradually increasing prices for some time, but the post-pandemic inflation has prompted them to make a major price hike. According to a sports bar owner who spoke to the investigative journalism organization The Lever, the four companies raised the price per pound (about 450g) of frozen potato products almost simultaneously and by almost the same amount. Frozen potato products are bundled with other supplies, making it virtually impossible to procure them from other manufacturers.
Katja Schwenk, a reporter at The Lever, calls the four companies that dominate the frozen potato industry 'Big Potato' and points out that Big Potato forms a kind of cartel. Big Potato cooperates in industry associations and lobbying, and its executives move between companies in the cartel. Doctorow points out that they use a third-party app called 'Potatotrac' to manipulate the prices of frozen potato products in a non-criminal way.
Each cartel member would send Potatotrac commercially sensitive data such as supply costs, pricing and sales, and Potatotrac would then use that data to advise the companies on 'optimal pricing,' allowing them to implement coordinated price hikes without the members of the companies actually colluding directly.
The tactic of 'legally manipulating prices through an app' is by no means limited to the frozen potato industry. In fact, meat processors in the United States are reportedly manipulating the prices of meat products in a similar way to Potatotrac through a data broker called 'Agri Stats.'
However, the administration of former President Joe Biden has raised concerns about this practice, and in 2024 the Federal Trade Commission (FTC) warned that price manipulation using algorithms could also be illegal. The Department of Justice then filed an antitrust lawsuit against Realpage, a company that develops software that suggests the best pricing strategies for the real estate rental market.
FTC warns that algorithmic price manipulation may violate antitrust laws - GIGAZINE
The question is whether the new President Donald Trump administration will continue to consider price manipulation through apps and algorithms illegal. 'It's true that inflation has many causes, but when an industry is integrated enough to have access to data brokers or colludes implicitly, whatever the cause of inflation -- war, disease, weather -- the whole sector can raise prices in unison and keep them high long after the shock has passed,' Doctorow said, arguing that price manipulation through apps hinders fair competition.
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