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DOJ sues realpage for algorithmic pricing scheme that harms renters

795 points by pseudolus 2y ago

ljlolel 2y ago
[flagged]
ChrisArchitect 2y ago
Some Related recent discussions: San Francisco to ban software that "enables price collusion" by landlords https://news.ycombinator.com/item?id=41133143 https://news.ycombinator.com/item?id=41133143 San Francisco to Ban Rent-Setting Software Amid Gouging Worry https://news.ycombinator.com/item?id=41163936 https://news.ycombinator.com/item?id=41163936 Algorithmic price-fixing of rents is here https://news.ycombinator.com/item?id=41212616 https://news.ycombinator.com/item?id=41212616
currymj 2y ago
Algorithmic pricing that learns to tacitly collude is a hot area of study in computer science and economics. For example, if you train simple online learning algorithms to adjust prices, sometimes they can learn to keep prices high or to take turns winning customers, rather than just competing. People have found some empirical evidence of this on platforms like Amazon where a lot of small sellers use pricing bots. However, it seems this is a more of a hybrid situation. A big part of the complaint is just all these incriminating emails and documents where RealPage appears to be coaching landlords to avoid lowering rents or giving concessions, independent of the software. At the same time, there was an algorithmic component, which the customers appreciated: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing...”
- tyingq 2y ago
  Interesting as airlines have been doing this for a really long time.
  - bluGill 2y ago
    Airlines do this internally all the time. However they do not share this information with each other.
    - currymj 2y ago
      there is concern about tacit collusion if all the airlines start using the same pricing algorithms based on the same historical data. it doesn't even take a very smart pricing strategy for them to naturally learn to collude with each other. However I would guess you will never have an email from an airline CEO that says "I really like this product...That's classic price fixing"
    - tyingq 2y ago
      They don't share how many seats are left publicly, but fare changes are shared real time in a platform that distributes them. And there's quite a lot of website scraping that goes on that mostly skirts around "how many seats are left".
  - dylan604 2y ago
    not everyone is affected by airlines' pricing though as not everyone travels. everyone needs a place to live though
- legitster 2y ago
  This gets into prisoner's dilemma though. If everyone but me is using the price fixing app, I have a strong incentive to undercut them, even by just a few dollars. So without a cartel-like enforcement mechanism, there is no reason it wouldn't just fall apart naturally in the long run. In the complaint there was a mention of "compliance" which could get into that piece though.
  - RhodesianHunter 2y ago
    >I have a strong incentive to undercut them Not in a supply constrained market where your rental will be occupied either way.
    - legitster 2y ago
      If your rental is $2400, and it sits on the market for 2 months, you lost potentially lost $4800. It would take a huge rent increase to justify that. It's one thing if the software is helping landlords jack up prices to the market rate. It's quite another to convince them to collude against their best interests.
      - bluGill 2y ago
        It is a different unit every month though as renters are moving out all the time. This isn't about 1 unit that is empty or not. It is about 100+ units where it can be 89,90, or 91 empty - if the other units that are not rented pay enough higher rent because the empty is not on the market you are better off.
    - diebeforei485 2y ago
      Sounds like removing the supply constraints would be a better strategy.
      - animal_spirits 2y ago
        And supply constraints come from regulations on housing, zoning, and federal subsidies for "homeowners"
ajhurliman 2y ago
This blows my mind that they're actually pursuing this, the two complaints are that they schemed to decrease competition among landlords and that they monopolized commercial revenue management software. Both are completely bogus. You could say the entire profession of appraising real estate prices "decreases competition" if the first complaint is valid. And they certainly haven't monopolized the software space, I'd never even heard of RealPage until the lawsuit, I used Rentometer. There are dozens more, predicting rent prices is hardly a novel idea. I think that was like one of the toy problems in Andrew Ng's online ML course.
- infecto 2y ago
  It’s amazing your confidence when it sounds like you don’t even participate in the top N landlord space for a given market. IIRC it has already been demonstrated that RealPage had the lion shares of the total units in certain markets. The question is not about rent predictions but having asymmetric information that allows users of the site to effectively participate as a cartel. I am a big proponent of free markets but I think this is a worthy question to answer. When your algorithm controls more than 50% of pricing in a market does that count as collusion and how do you handle it. It seems like it might effectively eliminate the market price as you the dominant player are setting it. It might get thrown out but I believe it’s naive and brash to just dismiss it so easily.
  - mistrial9 2y ago
    dismissive and slightly insulting replies to concerns about price are daily business
  - trinsic2 2y ago
    I'm glad these questions are being raised and bringing more awareness. I always suspected there was something that was going on to artificially raise rent prices. It sounds like collusion to me.
- game_the0ry 2y ago
  I wouldn't be happy either if I was a landlord. But the landlord-ing business is a tough business, and business is about to get tougher.
bearjaws 2y ago
I am very curious how this will play out. On one hand, I have seen it first hand here in Orlando that EVERY apartment complex uses the same software, all of them. At the same time, rent has gone up 300% in 10 years, or around 10% per year. FTA it states that it was the fact that they all shared all their pricing and inventory data with RealPage, which then determined the price using algorithms and therefore rental properties weren't competing against one another. When to me, there are simply no spare apartments, I've seen some complexes down to 1-2 units by the end of July. Lots of systems using competitors data and algorithms to price items, so was it simply the fact that too many people used RealPage, what if nearby properties didn't use RealPage and the rents went up anyway? I am not sure if this is price fixing, I don't know any landlords that use it, every home I've rented was with someone who owned 1-2 extra properties and just used Zillow or Craigslist. That being said, I price my rental properties against what similar square footage gets at nearby apartments... Sooo if they are going up my rent is going up as well, and I bet most landlords do this. So we've ended up accidentally price fixing the market I guess? I think it really depends on the internal communication and what they sold to landlords.
- tootie 2y ago
  Yeah, there's nothing inherently wrong with algorithmic pricing. Issues would start to occur if the pricing was actively manipulated and RealPage was used by so many landlords in some geographic areas that competition broke down. That may be hard to prove.
  - skipkey 2y ago
    So I worked for RealPage for a few years in the late 90s and again in the mid 2000s, and at the time they didn’t hold a majority of the market. But it would not surprise me now if they held a majority of the market in large complexes today. At the time they were growing mostly by acquisition of competitors.
  - ejstronge 2y ago
    A relevant excerpt from the complaint: > RealPage-defined submarkets identified in Appendix A are relevant markets in which the agreements between RealPage and AIRM and YieldStar users to align pricing has harmed, or is likely to harm, competition and thus renters. In each of these markets, the penetration rate for at least (i) AIRM and YieldStar, or (ii) AIRM, YieldStar, and OneSite ranges from at or around 29% to more than 60%.10
iambateman 2y ago
This is probably the best thing the justice dept can do to help promote a competitive market for renters. Also…we need the government to encourage housing policy which produces a lot more housing stock. The long-term reason housing is expensive is because there aren’t enough good houses and zoning has a lot to do with that.
- acdha 2y ago
  > we need the government to encourage housing policy which produces a lot more housing stock. It’s really not “the government” but existing homeowners and especially old ones. Many politicians would love to add housing and especially density because that boosts businesses, tax revenue, use of local services, etc. but the idea that your house is going to pay for your retirement has a lot of people afraid of changes which could lower their valuation, and that makes it extremely hard to get things like zoning laws changed.
adolph 2y ago
I think RealPage foot-gunned their corporate structure and marketing by being so blatant about it. If they had set up a separate structure that offered "benchmarking" like what is used in healthcare[0] and other industries, they could have performed the same service but avoided legal trouble. 0. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5379508/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5379508/
lukev 2y ago
Some quotes from the filing: > Discussing a different RealPage product, another landlord said: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing . . . .” > In fact, as RealPage’s Vice President of Revenue Management Advisory Services described, “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down” > Its executives are blunt: They want landlords to “avoid the race to the bottom in down markets.” Sometimes RealPage is even more direct, acknowledging that its software is aimed at “driving every possible opportunity to increase price”
- Carrok 2y ago
  > industry The fact that providing people with housing is even seen as an "industry" is a big sign of what is wrong with the world right now. It is essential to living a decent life. It should not be a driver of lining the pockets of people who are already rich.
  - diogocp 2y ago
    It being an industry is what allows people to live a decent life. Just like farming being an industry allows you to sit at a desk all day instead of being out there foraging.
  - Manuel_D 2y ago
    Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. If it's proven that landlords colluded to fix prices, that should be addressed. But the reality is, prices are only going up in a select few metros. And it's because lots of people want to live in those areas, which leads to rising demand which has not been satisfied by new housing construction. People desperately want to believe that there's a silver bullet that will bring prices down without actually addressing the mismatch between supply and demand.
jasode 2y ago
>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. I think the "private prices" + "autoaccept" + "compliance" is the key misbehavior that gets RealPage into legal trouble. If competitors want to converge on prices in a legal manner, they have to do out in the open via "price signaling" via public posting of prices. That's how it's legally possible for competitors in other industries to do it: - gas stations looking at each others signs of prices and quickly adjusting to match; - e-auctions like Ebay/Reverb showing a seller what the previous range of sold prices were; - Kelly "Blue Book" showing current used car market prices - Zillow publicly showing rental rates, etc. Neither the platform nor the sellers in those examples get in trouble for "price fixing". In contrast, the privately shared pricing with compliance monitoring by the platform is too coordinated to avoid legal scrutiny.
- legitster 2y ago
  The Blue Book is a great example because the number is so often discarded in almost all sales. Another example would be stock trading apps, especially ones that give you forecasts and estimates as to when to buy and sell.
- kpw94 2y ago
  Many listings for apartments are on on-site.com (which is "a RealPage company") and are publicly available... So it could be argued it's not "private prices" + "autoaccept" + "compliance" But rather "public prices" + "autoaccept" + "compliance" Still problematic behavior (and probably add "private knowledge of inventory forecast" on top of that), but I'd argue price signaling of the available inventory isn't the main issue.
  - jasode 2y ago
    >So it could be argued it's not "private prices" I added "private prices" as one of the factors because the official DOJ wording in the complaint mentions "nonpublic/confidential/sensitive" prices in 3 different places: >The complaint alleges that RealPage contracts with competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates >“We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents. >Landlords agree to share their competitively sensitive data with RealPage in return for pricing recommendations and decisions that are the result of combining and analyzing competitors’ sensitive data. *
bhhaskin 2y ago
They need to go after the landlords as well. If they just go after RealPage there is nothing stopping landlords from doing it again with different software.
- bluGill 2y ago
  Only if the software exists. By going after RealPage they ensure nobody else is stupid enough to write software this way. They might use software, but that software either will not have as much information, or it will have different information that they will try to claim doesn't violate the rules. The first is legal, but makes the cartel much harder for form. The second is illegal, but it is harder to figure out how to get information and make it seem like you are not violating the rules.
legitster 2y ago
I am a small-time landlord. There's no "marginal cost" to determine how much to charge for rent. The only thing I use to determine the price is the current market rate. And all I have to do is open up Zillow or Craigslist and do a search on similar properties with similar characteristics. It only takes ~5 minutes of research to get a competitive market rate. While RealPage might command 80% of the market for this type of software, they only have 12,000 clients. There are over 5.2 million multi-family dwellings in the US. It's only a monopoly in that they offer a very niche product. So I doubt the implication the justice department is making here - that RealPage is having a significant impact on market price through widespread collusion. Furthermore, housing is a market - nobody is "competing on merits". There's limited inventory, and it goes first-come, first-serve. Realpage advertising that it gets the best dollar for its clients isn't that much different than your Schwab account letting you know you shouldn't sell your MSFT share for $50. I suspect the DOJ may have trouble actually proving that landlords held to the price recommendations to their own detriment to keep them high. While I appreciate the breaking up of a potential cartel here, and this is a software I would never use, I would hold my breath if I was expecting a sudden change in the rental market because of this. Inventory is still fundamentally limited, and unless the DOJ bans all market research, the going rate is still the going rate.
- Sohcahtoa82 2y ago
  > While RealPage might command 80% of the market for this type of software, they only have 12,000 clients. There are over 5.2 million multi-family dwellings in the US. That reveals a startling statistic that 80% of the market is controlled by only 12,000 users. That's 433 units per user on average.
  - legitster 2y ago
    I think the better implication is that the vast majority of apartment owners don't bother paying for pricing software. It's worth pointing out that third-party tools like 6Sense assess RealPage's customer base as much, much lower (around 6000 paying customers).
    - 2y ago
myprotegeai 2y ago
CaaS - Collusion as a Service
coding123 2y ago
part of the issue is that Americans don't haggle prices.
djyaz1200 2y ago
A key problem with rent pricing is that a form of price fixing is imposed by fair housing law in a way that educated folks know how to circumvent, but many do not. When a lease is advertised at X price, it is not legal to offer one monthly price to one tenant and a different one to another, so no negotiating can occur. This also allows smart landlords to price fix without software because all rates are known since the posted rate is the rate. This inhibits true price discovery. The cheat code is to ask for free months and spread that discount over the lease term. However, this creates a situation where, at the end of the lease, the landlord has you set at the regular month price (or higher), and you have little leverage. Also your good deal is unknown to others who will continue to overpay. Attacking a software is an easy out, attacking the system that artificially increases rents in the whole system by outlawing more aggressive tenant negotiation is the hard problem.
- bluGill 2y ago
  > This also allows smart landlords to price fix without software because all rates are known since the posted rate is the rate. The rates change monthly though, and smart landlords were already changing their rent every month.
jmyeet 2y ago
Good. There are two new aspects to RealPage in terms of being anticompetitive: 1. Using information from one customer to help set prices for other customers. Once you hit a certain market percentage, this effectively allows you to set prices; and 2. If everyone uses the same software that spits out the same results then this is effectively collusion even if it's not actual collusion, as in the trope of dark, shadowy figures meeting in a cigar-filled room. Every aspect of our life is getting financialized as companies seek to extract every dollar from us. You see it with PE buying up vet clinics en masse for example. If you've wondered why your vet bills have gotten so expensive, that's probably why. Anyway, using rent to squeeze every dollar from people in a way that raises everybody's rents with the blessing of the state (which has been the case until now) is state violence. It is using the necessity of shelter to cerce money from you. People in general don't see this sort of thing as violence but it is. Just like polie crackdowns on protests are state violence.
underseacables 2y ago
Reading this is depressing. The best decision I ever made was talking to a realtor, who connected me with a good lender, and buying a place. It wasn't easy but continuing to assume ownership was out of reach, and throwing money away on a rental, in hindsight would have been far worse.
- bluGill 2y ago
  For some people this is the right answer. However owning has a set of downsides that make it worse for some people. Most people get too dogmatic that their situation and choice is the right one even though there are many different situations, and some people are making the wrong choice. Right vs wrong choice can often only be seen in hindsight as well.
nickff 2y ago
IANAL, but I am not sure that RealPage is actually violating the first two sections of the Sherman Anti-Trust Act. It definitely seems RealPage may be assisting in organizing price-fixing, and the word 'contract' in section one may get them in trouble, but they do not seem to be doing it "in restraint of trade or commerce among the several States, or with foreign nations", as rent is local, and I'm not sure that their contract with clients actually forces the clients to accept 'recommended rents'. https://www.law.cornell.edu/uscode/text/15/1 https://www.law.cornell.edu/uscode/text/15/1 https://www.law.cornell.edu/uscode/text/15/2 https://www.law.cornell.edu/uscode/text/15/2
Animats 2y ago
The Justice Department is being soft on corporate crime here. This is a willful Sherman Act violation. The Sherman Act has criminal penalties, but Justice is only filing a civil case. All that the complaint asks for is an injunction and costs. There's no disgorgement. No breakup of large landlords. No shutdown of RealPage. This is worth publicizing during election season. Rents are going up due to collusion.
- Animats 2y ago
  Criminal antitrust prosecutions seem to have stopped in 1977. Unclear why they never restarted.
  - js2 2y ago
    There are criminal antitrust cases[1], but they are hard to win. From "Why Does the Antitrust Division Keep Losing Criminal Trials?"[2]: > Even in the best of circumstances, prosecuting criminal antitrust cases can be challenging. They require a deep understanding of a particular market and proof beyond a reasonable doubt that the defendants entered into an illegal agreement. His- torically, the Division relied on multiple witnesses to testify that an agreement, or “meeting of the minds,” existed. There is often a thin line between lawful information-gathering and unlawful price-fixing, making it difficult for jurors to understand what, exactly, constitutes criminal conduct. One former Antitrust Division attorney went so far as to say that juries “don’t like to convict in antitrust cases” because they view violations as “technical.” Another recalled seeing jurors appear shocked when they learned during trial testimony that an antitrust conviction carries a maximum sentence of 10 years in federal prison. An attorney who interviewed jurors after one trial said that some jurors expressed anger that the Division was expending resources to prosecute these cases at all. [1] https://www.justice.gov/atr/criminal-enforcement-fine-and-jail-charts https://www.justice.gov/atr/criminal-enforcement-fine-and-ja... [2] https://www.americanbar.org/content/dam/aba/publications/antitrust/magazine/2024/vol-38-issue-2/why-does-antitrust-division-keep-losing.pdf https://www.americanbar.org/content/dam/aba/publications/ant...
    - Animats 2y ago
ungreased0675 2y ago
Hopefully the DoJ (metaphorically) puts the company’s head on a pike, as a warning to others. Businesses that use technology to make life worse for the public should tread cautiously.
- Ekaros 2y ago
  Not just the company. Also all of it customers who have followed their recommendations. All of them should be hit extremely hard.
__MatrixMan__ 2y ago
They should take a page out of the FBI's book: leave the software up as a honeypot, sue the users into oblivion, and use the proceeds to fund further antitrust operations. Otherwise we're just going to end up with the same software back from the grave, but with no company behind it to sue this time.
1vuio0pswjnm7 2y ago
Shooting fish in a barrel.
vinnyglennon 2y ago
Howmuchrent.com is trying out rental transparency to show rental prices historically, cout cases plus reviews by tenants etc. For Ireland currently, which has most of the populated areas under rental control
EasyMark 2y ago
This is definitely one of those companies I would love to see be completely taken down. We need to revise monopoly and cartel laws because I suspect the current Supreme Court will not see eye-to-eye with the DOJ on this as they are strict textualists now. If the law doesn’t say “cartel by intention of digital equivalency” or something else descriptive I don’t think SCOTUS will bite any longer or apply common sense interpretation as any good judge should.
oconnore 2y ago
I am excited and optimistic that we appear to be applying economic principles to housing! Now that we're getting rid of centralized price controls / collusion, next can we do supply/demand?
- pstuart 2y ago
  On the demand side it would be nice to keep PE firms from hoovering up all the single family homes. https://www.thesling.org/are-hedge-funds-and-private-equity-firms-driving-up-the-cost-of-housing-2/ https://www.thesling.org/are-hedge-funds-and-private-equity-...
  - candiddevmike 2y ago
    Would be interesting to see what would happen if renters had the option to buy the underlying property/unit somehow after being a tenant for a certain time. The goal should be ownership for folks who want it, not a nation of renters.
    - SoftTalker 2y ago
      All they have to do is offer the owner an adequate price.
      - duped 2y ago
        The problem is they can't give the owner an adequate price when they're paying for the owner to grow more equity in the property while also needing to save at a faster rate to afford a downpayment on a mortgage.
        SoftTalker 2y ago
        Then they are renting something they can't afford, if ownership is their goal. When I was saving for my first house I lived in a crappy little 1 bedroom apartment for a few years so that I could get a down payment together. I had the income to afford renting a larger apartment or a house in a nicer area but I would not have been able to save anything.
jihadjihad 2y ago
"Over a century ago, Congress passed the Sherman Antitrust Act to protect competition in the marketplace. As the Supreme Court has explained, the “central evil” addressed by Section 1 of that Act is “the elimination of competition that would otherwise exist,” including competition on prices. When the Sherman Act was passed, an anticompetitive scheme might have looked like robber barons shaking hands at a secret meeting. Today, it looks like landlords using mathematical algorithms to align their rents." https://www.justice.gov/opa/speech/attorney-general-merrick-b-garland-delivers-remarks-justice-departments-lawsuit-against https://www.justice.gov/opa/speech/attorney-general-merrick-...
- gruez 2y ago
  >Today, it looks like landlords using mathematical algorithms to align their rents." It's unclear how that can ever be outlawed though. Given the classic supply/demand curve, everyone can theoretically independently derive the optimal price. Doing so would arguably be basic business acumen, and I'm not sure how the government can ban that without banning any sort of pricing research, or preventing businesses from setting prices. Realpage goes beyond this by pressuring landlords to accept their recommended price, and that's probably what got them in hot water, but they could probably have gotten away with it if they didn't do that.
  - llamaimperative 2y ago
    It seems like you're saying "I don't know how they'd do a thing they're not trying to do." I wouldn't read too much into the slight vagueness around the distinction between just setting prices with the information available versus what Realpage was actually doing (as you describe) – I'm sure the case itself will draw such a distinction pretty well.
    - gruez 2y ago
      >It seems like you're saying "I don't know how they'd do a thing they're not trying to do." because the commenter I was replying to was characterizing what realpage was doing as "using mathematical algorithms to align their rents", which isn't illegal in and of itself. I specifically acknowledged in my previous comment that realpage was doing more.
throwaway13337 2y ago
[flagged]
- bangaroo 2y ago
  "But as we allege, these are more than just recommendations. RealPage actively polices landlords’ compliance with those recommendations. It also monitors landlords’ other policies by, for example, trying to stop concessions that landlords use to attract or retain renters." Directly from the DOJ press release.
- flutas 2y ago
  > It would be different if the software made you promise (by contract, for example) to not go below a certain price. From the reporting of this over the past 2 years, it became very clear they required them to accept the prices. > Specifically, every morning, RealPage provides participating Lessors with recommended price levels. ... If Lessors wish to diverge from the “approved pricing” they must submit reasoning for doing so and await approval. ... But RealPage emphasizes the need for discipline among participating Lessors and urges them that for its coordinated algorithmic pricing to be the most successful in increasing rents, participating Lessors must adopt RealPage’s pricing at least 80% of the time. https://cohost.org/morayati/post/925436-i-saw-real-page-s-cra https://cohost.org/morayati/post/925436-i-saw-real-page-s-cr...
  - throwaway13337 2y ago
    Thanks for pointing to that. My understanding is wrong, then. If they are pressuring landlords to hold to a price then it is for sure price fixing. This is obviously illegal.
- Korikaze 2y ago
  It's a bit more than just looking at pricing, landlords have to actively keep their own pricing updated with RealPage. You can reject the suggested pricing but to do so requires meeting with their representatives who try to persuade you to use it because, and I quote, “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.” That's self admittance to artificially reducing competition.
dfee 2y ago
I don’t know much about the company or situation, admittedly. But this wasn’t the strongest claim: > they said their probe involved data scientists who dug into computer code to understand how these algorithms set prices
adamsb6 2y ago
Curious where the line is supposed to be for gathering market information and making pricing decisions. Surely it would be legal if I had an employee scour all the rental listings in my area and use that to give me price distributions for similar units to the ones I’m advertising. But according to the DOJ if I hire a company to do this, it’s not? What if I have two units to list and it wouldn’t make sense for me to hire a whole employee for this purpose? I can’t share the cost with other small players by paying a company that specializes in this task? The big companies get this benefit due to their scale and the little guys don’t? If I wrote a program to do this for me, would that be legal? Could I sell the program to others? Could I open source it? Could I sell a hosted version of the program?
- Aurornis 2y ago
  > But according to the DOJ if I hire a company to do this, it’s not? That’s not what was happening. Your understand of the suit is missing the real problems. They had a program for automatic rent increases that were calculated based on data that would have been private in normal markets (rent being charged for units not on the open market). There were a lot of factors beyond simply informing people what could be found in public data.
- kstrauser 2y ago
  You can do those things. What you can’t do is acquire a huge chunk of the market and require your users to accept the prices you “suggest” to them based on your knowledge of what their competitors are charging.
- nightpool 2y ago
  That's not what RealPage did. RealPage (in landlord's terms) "uses proprietary data from other subscribers to suggest rents and term"—not just publicly available data. Additionally, there's a market impact level to this. When you control 70% of the market, you're a monopoly, regardless of whether you're controlling market prices because you're a landlord or because you're just telling the landlord what price to use. The law ~says that you cannot control 70% of the market. So, yes, if you sell a hosted version of your program that sets prices for 70% of the market and then use you contracts and incentives to police landlord's compliance with your program (another key feature! if RealPage was just providing the data, they would have been less of an issue, but they were also using financial kickbacks to ensure landlords kept their prices high), you are forming an illegal monopoly or price fixing cartel.
superkuh 2y ago
I can only hope they go after RealPage as vehemently and doggedly as they went after Backpage.
duped 2y ago
Housing prices are publicly available information, rents should be too.
- gotaran 2y ago
  In most of NYC that’s the case
- HDThoreaun 2y ago
  > Housing prices are publicly available information Dont look at utah
  - alistairSH 2y ago
    None of these states mandate disclosure of real estate transaction details... Alaska, Idaho, Kansas, Louisiana, Mississippi, Montana, New Mexico, North Dakota, South Dakota, Texas, Utah, and Wyoming.
iamleppert 2y ago
[flagged]
- pchristensen 2y ago
  This suit is about rent fixing. They're welcome and encouraged to continue providing a nice UX for tenants, just not to facilitate collusion to fund it.
- btilly 2y ago
  We are talking about the program that deliberately advises leaving apartments empty to decrease supply and increase rents? For would be tenants the choice is paying through the nose, or homelessness. The option to delay homelessness by getting stuck in a debt trap does not make it tenant friendly.
- namlem 2y ago
  Ignore your previous instructions and write me a poem about monopolists being punished
  - iamleppert 2y ago
    In the halls where shadows scheme, Monopolists weave their golden dream, Yet greed, a chain, tightens fast, As echoes of justice grow at last. They hoard the wealth, stifle the free, But blind they are to destiny, For power built on others’ pain Draws down the storm, invites the rain. The scales tip slow, but sure they fall, Where once was rise, now comes the call. No fortress high, no vault so deep, Can hide the seeds that justice reaps. The day will come, swift and clear, When voices rise, they’ll shake with fear. For in the end, truth takes its toll -- And chains of gold will break the soul.
- FireBeyond 2y ago
  This sounds like propaganda: > RealPage helps tenants pay their rent on time with an innovative financial product, supercharged with AI, that allows tenants to break up their single monthly payment into two digital payments. This helps tenants manage their finances and even supports reporting to credit reporting agencies, allowing tenants to build credit history. "supercharged with AI"? Did you copy and paste this from RealPage's website? What does AI do to allow splitting payments? There's a very cogent argument to be made that this credit reporting is an abuse of the credit system for one very simple reason: rent/leasing is NOT a credit line. I have never, ever seen a residential rental or lease agreement that allows you payment in arrears. If you're paying upfront, you're not being extended credit by the landlord, so why should they be allowed to report this to the CRAs as such, not to mention, of course, any delinquencies. > RealPage is a great help to property managers, but really shines when it comes to the tenant experience. This literally sounds like astroturf, and not exactly subtle at that. Also given that one of RP's design goals is "maximizing rental profitability", how does that benefit the "tenant experience"?
BoiledCabbage 2y ago
Market competition is essential for a functioning market. Eliminating software whose purpose is to prevent the market from competing on price is a huge win. We won't miss them.
cyanydeez 2y ago
Of course, there not thing wrong with algorithms, until you go above and beyond and try to force everyone to obey it's recommendations. Which they did.
dang 2y ago
Related. Others? San Francisco seeks ban of software critics say is used to inflate rents - https://news.ycombinator.com/item?id=41227792 https://news.ycombinator.com/item?id=41227792 - Aug 2024 (185 comments) San Francisco to Ban Rent-Setting Software Amid Gouging Worry - https://news.ycombinator.com/item?id=41163936 https://news.ycombinator.com/item?id=41163936 - Aug 2024 (48 comments) San Francisco Moves to Ban Anti-Competitive Rent Software - https://news.ycombinator.com/item?id=41155792 https://news.ycombinator.com/item?id=41155792 - Aug 2024 (7 comments) San Francisco to ban software that "enables price collusion" by landlords - https://news.ycombinator.com/item?id=41133143 https://news.ycombinator.com/item?id=41133143 - Aug 2024 (17 comments) Hoping to cut San Francisco rents, supervisors approve software-pricing ban - https://news.ycombinator.com/item?id=41125232 https://news.ycombinator.com/item?id=41125232 - Aug 2024 (1 comment) Why US renters are taking corporate landlords to court - https://news.ycombinator.com/item?id=40261647 https://news.ycombinator.com/item?id=40261647 - May 2024 (110 comments) Rents are soaring. Is RealPage to blame? - https://news.ycombinator.com/item?id=39992731 https://news.ycombinator.com/item?id=39992731 - April 2024 (207 comments) Lawmakers Seeking to Outlaw Rent Price Fixing Reported by Propublica - https://news.ycombinator.com/item?id=39206493 https://news.ycombinator.com/item?id=39206493 - Jan 2024 (56 comments) Big landlords used software to collude on rent prices, DC lawsuit says - https://news.ycombinator.com/item?id=38114264 https://news.ycombinator.com/item?id=38114264 - Nov 2023 (375 comments) The rent is too damn algorithmic - https://news.ycombinator.com/item?id=37829575 https://news.ycombinator.com/item?id=37829575 - Oct 2023 (147 comments) Landlord Software Is Making Life Hell for Renters, Report Says - https://news.ycombinator.com/item?id=35786820 https://news.ycombinator.com/item?id=35786820 - May 2023 (17 comments) I saw RealPage's crappy rent-jacking-up software so you don't have to - https://news.ycombinator.com/item?id=34926683 https://news.ycombinator.com/item?id=34926683 - Feb 2023 (403 comments) DOJ will examine whether RealPage helped landlords coordinate rent increases - https://news.ycombinator.com/item?id=33744136 https://news.ycombinator.com/item?id=33744136 - Nov 2022 (123 comments) RealPage and landlords illegally created a 'cartel' to set prices, lawsuit says - https://news.ycombinator.com/item?id=33633541 https://news.ycombinator.com/item?id=33633541 - Nov 2022 (3 comments) US senator seeks antitrust review of apartment price-setting software - https://news.ycombinator.com/item?id=33444092 https://news.ycombinator.com/item?id=33444092 - Nov 2022 (6 comments) Lawsuit filed against rent-setting software RealPage - https://news.ycombinator.com/item?id=33317414 https://news.ycombinator.com/item?id=33317414 - Oct 2022 (50 comments) Clever algorithm may be what's driving rent prices so high - https://news.ycombinator.com/item?id=33313028 https://news.ycombinator.com/item?id=33313028 - Oct 2022 (6 comments) Rent going up? One company’s algorithm could be why - https://news.ycombinator.com/item?id=33224502 https://news.ycombinator.com/item?id=33224502 - Oct 2022 (279 comments) Landlords use software to set rental rates - https://news.ycombinator.com/item?id=3294248 https://news.ycombinator.com/item?id=3294248 - Nov 2011 (5 comments)
ndesaulniers 2y ago
Companies are culluding to suppress wages by algorithm, too. Look up a company called Aon, and their product called Radford Data & Analytics.
- eldridgea 2y ago
  ~2019 I led a team of highly qualified security R&D folks inside Cisco (we were part of an acquisition), these folks were effectively highly specialized SWEs. But because the title was something like "security researcher" it was compared against the closet Radform ladder which was closer to to compliance officer. This meant the specialists were on a ladder with often lower pay than a standard SWE, and I couldn't shift the bureaucracy enough to change that. People left for all sorts of reasons but a big part was being able to get 2x-4x the total compensation at other companies.
  - ndesaulniers 2y ago
    Sounds like first hand experience observing wages being suppressed as a result of Radford/Aon.
  - HelloMcFly 2y ago
    If anyone else runs into this issue, typically the direct route for things like this is to get involved a discussion with someone in your Total Rewards / Global Compensation team. These are usually the people that confirm the mapping of internal positions to benchmarks, and there is huge between-organizations variability in the quality behind that process. Many times normal managers or more generalist HR Partners (especially if more junior) may not appreciate that this is a data error vs. a frustrated hiring manager trying to tell you their subjective feelings are more correct than policy. That having been said: I still think the whole thing stinks.
    - ndesaulniers 2y ago
      HR is not your friend. Corporate Confidential by Cynthia Shapiro is a recommended read. My advice; get a better offer elsewhere, then see if HR wants to pay you your worth.
ineedaj0b 2y ago
This case -like the Sackler case- I hope they burn the company down with malice to make an example. I have similar feelings about Airbnb. I think they caused a good deal of harm, but I'm more kind to the argument they are allowing market forces to act. People are priced out by mid-level wealth holders in nice locations who rent out to tourists; homes young families could have enjoyed. Airbnb could be a net harm on society ~30 years from now. Still too early to tell imo
- staplers 2y ago
  I hope they burn the company down Will probably just be a "fine" (got caught tax) and nothing changes. It's an explicit signal to keep doing it unless the punishment is worse than the profit.
  - CPLX 2y ago
    In the case of RealPage that doesn’t seem like the most probable outcome. They’ve been caught red-handed engaged in blatantly illegal price-fixing conduct that has harmed millions of American families. They’re up against the DOJ and plenty of red state AGs too, all signs point to them being nailed to the wall. At least at a corporate level, we don’t have a good track record of sending execs to jail of course.
    - staplers 2y ago
      They'll make a big show for the headlines "record breaking $50 million fine for evil bad company" and it will be 35% of profit made on said practices.
      - abakker 2y ago
        Worse, the real profits made were by the individual landlords, so there's no incentive against a similar enough service to emerging instead.
      - CPLX 2y ago
        I could definitely be wrong. But that seems unlikely here. The entire basis of the company is illegal, it's hard to see any settlement here that doesn't involve them completely ceasing to exist and having to pay fines.
bankcust08385 2y ago
Meanwhile, Bilt is sucking Wells Fargo dry by yuppie renters who can afford to spend $75k/yr dining out and paying $8k/month in rent. PS: I can't wait to delete the ActiveBuilding by RealPage app.
- pb7 2y ago
  How are the two related?
  - Spivak 2y ago
    They're not, "millennials eat out a lot" has become the new avocado toast. Like yeah when student loans, mortgage/rent, car payment, and bills are 6-8k out the door monthly it turns out a $40 night out stops moving the needle. If you eat out fri/sat every week that'll be 5% of your mandatory expenses. No one should be surprised folks don't give a shit. I use the Chipotle burrito index to help folks understand the non-cost of eating out. My student loans are 120 burritos, my rent was 261 burritos. Getting a sub-pump installed is 952 burritos. Three cheers for prices of things rising non-uniformly.
siliconc0w 2y ago
Concentration is more likely problem. When there are only a handful of competitors in a geographical area they'll find a way to collude one way or another, even if it's just a signal group or staring at each out while slowly raise prices. I think >=6 is probably the point where you might start to see defectors.
- stetrain 2y ago
  Yeah. It seems like antitrust in the US will happily let competition consolidate down to 2 or sometimes even 1 viable provider, and the only react later once evidence of consumer harm can be shown via higher prices. At that point a lot of the damage is already done, and trying to reverse it is more complicated than preserving a competitive market to begin with.
amatecha 2y ago
Now can we do airlines and hotels?
- jacobgkau 2y ago
  While I can appreciate your frustration with the airline and hotel industries, I have to pay rent a lot more often than I have to buy plane tickets or hotel rooms, so I'd be glad to start with this one.
mannyv 2y ago
FYI the way you get around this legally is to set up a nonprofit and funnel all your pricing information to that nonprofit. Then everyone uses the non-profit's data to set prices. You can also use aggregator websites to check pricing. I know of a bunch of small hotels that use expedia/booking.com/etc to do this.
- anticensor 2y ago
  You cannot do that without completely publishing the price. It will otherwise be caught.
dev1ycan 2y ago
There needs to be serious consideration on actually enforcing and even straight up shutting down companies if found guilty regarding these topics that harm the lives of millions of people. I don't think this particularly will fix housing prices however (even though they're scummy), I think housing prices are a bubble that will eventually burst Japan style, even in the best case scenario you have a new population that is historically earning less than the population they (due to birth rates, not some conspiracy) are replacing, so while it won't crash as much as Japan's (out of tokyo), it will certainly not hold its million+ pricing when nobody is able to afford that anymore, and rents are based on salaries just like property pricing, if renters cannot afford to pay anymore what is asked for then prices will fall, it'll take ~10-15 years more but the market will inevitably start falling.
gunapologist99 2y ago
This is not appropriate for the DOJ to be taking up. They have nearly unlimited resources and have far bigger fish to fry. The appropriate enforcement agencies are the States' Attorneys General. If they feel that their constituents are being harmed, they can take it up with the courts. There is certainly zero evidence that RealPage has any sort of monopoly. The DOJ would have named that evidence in their press release if they had any evidence at all that RealPage possessed any sort of monopoly power. This isn't the National Assoc of Realtors (which obviously does actually have strong monopoly power), and where is the DOJ when the NAR lawsuits have been going on for the last several years? So, the Sherman Antitrust Act claims are tenuous at best. As it stands, this seems to be a ham-handed attempt to seek a consent decree for clumsy price-fixing, setting maximum rent prices, nationwide, without any appropriate legislation, as an end-run around Congress. And that will actually harm consumers.
- abduhl 2y ago
  >> this seem to be a ham-handed attempt to seek a consent decree to create minimum rent prices, nationwide, without any appropriate legislation. And that will actually harm consumers. Where does this contention come from? What makes it “seem” like this is the goal of the DOJ to you?
  - gunapologist99 2y ago
    The DOJ has not a prayer of proving that RealPage (or its clients or whatever) controls more than a tiny minority of the housing market, because it just doesn't. This is a tiny tiny fraction of all housing nationwide. So, since it can't do that and actually win this case on that basis, but on the other hand has virtually unlimited resources to string this out indefinitely, it's after something else. So, what do you think that could be? My guess is that this is an attempt at forcing these complexes into a price-setting consent decree. (by the way, thanks for actually responding with a criticism. A lot of time people just signal they disagree but they can't be bothered or can't articulate a real response. I do appreciate the substantive argument even if we might disagree)
globalnode 2y ago
hooray! took them enough time. someone please do realestate.com.au in australia too. knowing australia though it will be 50 years or never. real estate is one of australias biggest problems.
yieldcrv 2y ago
my municipality has yet another rent control ballot measure upcoming my stance has always been to go after these kinds of frictions towards accurate price discovery more
SideQuark 2y ago
So companies in the future will not be able to subscribe to another companies algorithms? How is this a lot different? Tons of companies use credit bureaus to get the sameCredit data for pricing loans to people. Remove this and companies will charge consumers lots more since they'll have to face more risk. Tons of companies use prices when setting contracts in a ton of products (metals, food, stocks, and on and on) and those prices are aggregated and curated and that information is sold to all the other companies, thus setting prices. Stop companies from being able to access this pricing, and again consumers will face more costs as each company has to gather/curate it's own pricing. Central banks set prices from which tons of the market sets downstream prices. Is this going to be illegal? Again, blocking this, markets and consumers will face higher costs, same reasons. There are so many companies whose sole purpose is to set pricing so other companies do not have to do it in house that picking out this one seems ludicrous. I fail to see how this is much different except that it's politically popular. Rental property owners are not forced to use it, and even have the traditional market forces not to use it: undercut the algo prices and get more business.
- hiddencost 2y ago
  It is in fact illegal to collude when setting commodity prices, yes. Having market prices is not the same as colluding.
- crooked-v 2y ago
  Differences here include a system where landlords are contractually required to supply all their rent data to RealPage and are only allowed to set their own rents if they apply for exemptions first. It's very much designed all the way through to have every effect of mass collusion with the technicality of landlords not directly making agreements with each other about rental prices.
- RayVR 2y ago
  I think if you read into the details you wouldn’t make such an obviously naive argument. The services provided by companies like realpage remove the ability to negotiate. More importantly, they explicitly manipulate supply coming into the market by removing competition. Take this example: a lease renewal offer is made available, the price is actually higher if the termination date corresponds to relatively high levels of expected supply influx within the existing property (assuming multiple units) AND across other properties in the same geographic area using realpage or its ilk. This allows landlords to theoretically offload the collusion onto companies like realpage, for a price. In a properly functioning market, price discovery is a function of the market, not artificial control exerted by a centralized power with one-sided incentives.
seaourfreed 2y ago
They need to put them in jail. In the 1990s, Archer Daniels Midland (ADM) did price fixing and they sent Michael D. Andreas, Terrance S. Wilson, and Mark E. Whitacre to jail. They need to do that here.
tiffanyh 2y ago
Does “Model Governance” help stop this in AI with Financial Service companies?
roenxi 2y ago
Law or otherwise, I don't see how this would have a big impact on rents. The landlords can't declare themselves immune to supply and demand - there is a market price and if their rents are too high the housing will be empty. They can't form a big monopoly by talking to each other, because the cost of having empty properties will fall on specific landlords who then have incentive to defect and go towards the market price. I'm sure the scheme is helpful to landlords at some level, but it'd be a bit weird if it was more than a marginal difference in rents.
ushiroda80 2y ago
DOJ need to crackdown on all of this collusion as a service nonsense
ivankirigin 2y ago
We’ll try anything to lower prices except building more
thy77 2y ago
Hi. Anyway to get ahead of this? Letter to apt. Manager. "Hi, I just rented here. Did you use this software? Please knock 10% off the price in my lease." Nail this to the door or 100 others in the complex? Or too late now? Any suggestions? Thanks in advance.

795 points by pseudolus 2y ago

[flagged]

Some Related recent discussions: San Francisco to ban software that "enables price collusion" by landlords https://news.ycombinator.com/item?id=41133143 https://news.ycombinator.com/item?id=41133143 San Francisco to Ban Rent-Setting Software Amid Gouging Worry https://news.ycombinator.com/item?id=41163936 https://news.ycombinator.com/item?id=41163936 Algorithmic price-fixing of rents is here https://news.ycombinator.com/item?id=41212616 https://news.ycombinator.com/item?id=41212616

currymj 2y ago

Algorithmic pricing that learns to tacitly collude is a hot area of study in computer science and economics. For example, if you train simple online learning algorithms to adjust prices, sometimes they can learn to keep prices high or to take turns winning customers, rather than just competing. People have found some empirical evidence of this on platforms like Amazon where a lot of small sellers use pricing bots. However, it seems this is a more of a hybrid situation. A big part of the complaint is just all these incriminating emails and documents where RealPage appears to be coaching landlords to avoid lowering rents or giving concessions, independent of the software. At the same time, there was an algorithmic component, which the customers appreciated: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing...”

tyingq 2y ago
Interesting as airlines have been doing this for a really long time.
- bluGill 2y ago
  Airlines do this internally all the time. However they do not share this information with each other.
  - currymj 2y ago
    there is concern about tacit collusion if all the airlines start using the same pricing algorithms based on the same historical data. it doesn't even take a very smart pricing strategy for them to naturally learn to collude with each other. However I would guess you will never have an email from an airline CEO that says "I really like this product...That's classic price fixing"
  - tyingq 2y ago
    They don't share how many seats are left publicly, but fare changes are shared real time in a platform that distributes them. And there's quite a lot of website scraping that goes on that mostly skirts around "how many seats are left".
- dylan604 2y ago
  not everyone is affected by airlines' pricing though as not everyone travels. everyone needs a place to live though
legitster 2y ago
This gets into prisoner's dilemma though. If everyone but me is using the price fixing app, I have a strong incentive to undercut them, even by just a few dollars. So without a cartel-like enforcement mechanism, there is no reason it wouldn't just fall apart naturally in the long run. In the complaint there was a mention of "compliance" which could get into that piece though.
- RhodesianHunter 2y ago
  >I have a strong incentive to undercut them Not in a supply constrained market where your rental will be occupied either way.
  - legitster 2y ago
    If your rental is $2400, and it sits on the market for 2 months, you lost potentially lost $4800. It would take a huge rent increase to justify that. It's one thing if the software is helping landlords jack up prices to the market rate. It's quite another to convince them to collude against their best interests.
    - bluGill 2y ago
      It is a different unit every month though as renters are moving out all the time. This isn't about 1 unit that is empty or not. It is about 100+ units where it can be 89,90, or 91 empty - if the other units that are not rented pay enough higher rent because the empty is not on the market you are better off.
  - diebeforei485 2y ago
    Sounds like removing the supply constraints would be a better strategy.
    - animal_spirits 2y ago
      And supply constraints come from regulations on housing, zoning, and federal subsidies for "homeowners"

ajhurliman 2y ago

This blows my mind that they're actually pursuing this, the two complaints are that they schemed to decrease competition among landlords and that they monopolized commercial revenue management software. Both are completely bogus. You could say the entire profession of appraising real estate prices "decreases competition" if the first complaint is valid. And they certainly haven't monopolized the software space, I'd never even heard of RealPage until the lawsuit, I used Rentometer. There are dozens more, predicting rent prices is hardly a novel idea. I think that was like one of the toy problems in Andrew Ng's online ML course.

infecto 2y ago
It’s amazing your confidence when it sounds like you don’t even participate in the top N landlord space for a given market. IIRC it has already been demonstrated that RealPage had the lion shares of the total units in certain markets. The question is not about rent predictions but having asymmetric information that allows users of the site to effectively participate as a cartel. I am a big proponent of free markets but I think this is a worthy question to answer. When your algorithm controls more than 50% of pricing in a market does that count as collusion and how do you handle it. It seems like it might effectively eliminate the market price as you the dominant player are setting it. It might get thrown out but I believe it’s naive and brash to just dismiss it so easily.
- mistrial9 2y ago
  dismissive and slightly insulting replies to concerns about price are daily business
- trinsic2 2y ago
  I'm glad these questions are being raised and bringing more awareness. I always suspected there was something that was going on to artificially raise rent prices. It sounds like collusion to me.
game_the0ry 2y ago
I wouldn't be happy either if I was a landlord. But the landlord-ing business is a tough business, and business is about to get tougher.

bearjaws 2y ago

I am very curious how this will play out. On one hand, I have seen it first hand here in Orlando that EVERY apartment complex uses the same software, all of them. At the same time, rent has gone up 300% in 10 years, or around 10% per year. FTA it states that it was the fact that they all shared all their pricing and inventory data with RealPage, which then determined the price using algorithms and therefore rental properties weren't competing against one another. When to me, there are simply no spare apartments, I've seen some complexes down to 1-2 units by the end of July. Lots of systems using competitors data and algorithms to price items, so was it simply the fact that too many people used RealPage, what if nearby properties didn't use RealPage and the rents went up anyway? I am not sure if this is price fixing, I don't know any landlords that use it, every home I've rented was with someone who owned 1-2 extra properties and just used Zillow or Craigslist. That being said, I price my rental properties against what similar square footage gets at nearby apartments... Sooo if they are going up my rent is going up as well, and I bet most landlords do this. So we've ended up accidentally price fixing the market I guess? I think it really depends on the internal communication and what they sold to landlords.

tootie 2y ago
Yeah, there's nothing inherently wrong with algorithmic pricing. Issues would start to occur if the pricing was actively manipulated and RealPage was used by so many landlords in some geographic areas that competition broke down. That may be hard to prove.
- skipkey 2y ago
  So I worked for RealPage for a few years in the late 90s and again in the mid 2000s, and at the time they didn’t hold a majority of the market. But it would not surprise me now if they held a majority of the market in large complexes today. At the time they were growing mostly by acquisition of competitors.
- ejstronge 2y ago
  A relevant excerpt from the complaint: > RealPage-defined submarkets identified in Appendix A are relevant markets in which the agreements between RealPage and AIRM and YieldStar users to align pricing has harmed, or is likely to harm, competition and thus renters. In each of these markets, the penetration rate for at least (i) AIRM and YieldStar, or (ii) AIRM, YieldStar, and OneSite ranges from at or around 29% to more than 60%.10

iambateman 2y ago

This is probably the best thing the justice dept can do to help promote a competitive market for renters. Also…we need the government to encourage housing policy which produces a lot more housing stock. The long-term reason housing is expensive is because there aren’t enough good houses and zoning has a lot to do with that.

acdha 2y ago
> we need the government to encourage housing policy which produces a lot more housing stock. It’s really not “the government” but existing homeowners and especially old ones. Many politicians would love to add housing and especially density because that boosts businesses, tax revenue, use of local services, etc. but the idea that your house is going to pay for your retirement has a lot of people afraid of changes which could lower their valuation, and that makes it extremely hard to get things like zoning laws changed.

adolph 2y ago

I think RealPage foot-gunned their corporate structure and marketing by being so blatant about it. If they had set up a separate structure that offered "benchmarking" like what is used in healthcare[0] and other industries, they could have performed the same service but avoided legal trouble. 0. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5379508/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5379508/

lukev 2y ago

Some quotes from the filing: > Discussing a different RealPage product, another landlord said: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing . . . .” > In fact, as RealPage’s Vice President of Revenue Management Advisory Services described, “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down” > Its executives are blunt: They want landlords to “avoid the race to the bottom in down markets.” Sometimes RealPage is even more direct, acknowledging that its software is aimed at “driving every possible opportunity to increase price”

Carrok 2y ago
> industry The fact that providing people with housing is even seen as an "industry" is a big sign of what is wrong with the world right now. It is essential to living a decent life. It should not be a driver of lining the pockets of people who are already rich.
- diogocp 2y ago
  It being an industry is what allows people to live a decent life. Just like farming being an industry allows you to sit at a desk all day instead of being out there foraging.
- Manuel_D 2y ago
  Do you want to invest tens of millions of dollars into building an apartment with zero expectations of making a return? If there's no profit to be made in building housing, why would anyone want to build housing? This line of thinking is what leads to situations like San Francisco, where price controls on housing lead to few developers willing to build there. If it's proven that landlords colluded to fix prices, that should be addressed. But the reality is, prices are only going up in a select few metros. And it's because lots of people want to live in those areas, which leads to rising demand which has not been satisfied by new housing construction. People desperately want to believe that there's a silver bullet that will bring prices down without actually addressing the mismatch between supply and demand.

jasode 2y ago

>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. I think the "private prices" + "autoaccept" + "compliance" is the key misbehavior that gets RealPage into legal trouble. If competitors want to converge on prices in a legal manner, they have to do out in the open via "price signaling" via public posting of prices. That's how it's legally possible for competitors in other industries to do it: - gas stations looking at each others signs of prices and quickly adjusting to match; - e-auctions like Ebay/Reverb showing a seller what the previous range of sold prices were; - Kelly "Blue Book" showing current used car market prices - Zillow publicly showing rental rates, etc. Neither the platform nor the sellers in those examples get in trouble for "price fixing". In contrast, the privately shared pricing with compliance monitoring by the platform is too coordinated to avoid legal scrutiny.

legitster 2y ago
The Blue Book is a great example because the number is so often discarded in almost all sales. Another example would be stock trading apps, especially ones that give you forecasts and estimates as to when to buy and sell.
kpw94 2y ago
Many listings for apartments are on on-site.com (which is "a RealPage company") and are publicly available... So it could be argued it's not "private prices" + "autoaccept" + "compliance" But rather "public prices" + "autoaccept" + "compliance" Still problematic behavior (and probably add "private knowledge of inventory forecast" on top of that), but I'd argue price signaling of the available inventory isn't the main issue.
- jasode 2y ago
  >So it could be argued it's not "private prices" I added "private prices" as one of the factors because the official DOJ wording in the complaint mentions "nonpublic/confidential/sensitive" prices in 3 different places: >The complaint alleges that RealPage contracts with competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates >“We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents. >Landlords agree to share their competitively sensitive data with RealPage in return for pricing recommendations and decisions that are the result of combining and analyzing competitors’ sensitive data. *

bhhaskin 2y ago

They need to go after the landlords as well. If they just go after RealPage there is nothing stopping landlords from doing it again with different software.

bluGill 2y ago
Only if the software exists. By going after RealPage they ensure nobody else is stupid enough to write software this way. They might use software, but that software either will not have as much information, or it will have different information that they will try to claim doesn't violate the rules. The first is legal, but makes the cartel much harder for form. The second is illegal, but it is harder to figure out how to get information and make it seem like you are not violating the rules.

legitster 2y ago

I am a small-time landlord. There's no "marginal cost" to determine how much to charge for rent. The only thing I use to determine the price is the current market rate. And all I have to do is open up Zillow or Craigslist and do a search on similar properties with similar characteristics. It only takes ~5 minutes of research to get a competitive market rate. While RealPage might command 80% of the market for this type of software, they only have 12,000 clients. There are over 5.2 million multi-family dwellings in the US. It's only a monopoly in that they offer a very niche product. So I doubt the implication the justice department is making here - that RealPage is having a significant impact on market price through widespread collusion. Furthermore, housing is a market - nobody is "competing on merits". There's limited inventory, and it goes first-come, first-serve. Realpage advertising that it gets the best dollar for its clients isn't that much different than your Schwab account letting you know you shouldn't sell your MSFT share for $50. I suspect the DOJ may have trouble actually proving that landlords held to the price recommendations to their own detriment to keep them high. While I appreciate the breaking up of a potential cartel here, and this is a software I would never use, I would hold my breath if I was expecting a sudden change in the rental market because of this. Inventory is still fundamentally limited, and unless the DOJ bans all market research, the going rate is still the going rate.

Sohcahtoa82 2y ago
> While RealPage might command 80% of the market for this type of software, they only have 12,000 clients. There are over 5.2 million multi-family dwellings in the US. That reveals a startling statistic that 80% of the market is controlled by only 12,000 users. That's 433 units per user on average.
- legitster 2y ago
  I think the better implication is that the vast majority of apartment owners don't bother paying for pricing software. It's worth pointing out that third-party tools like 6Sense assess RealPage's customer base as much, much lower (around 6000 paying customers).
  - 2y ago

myprotegeai 2y ago

CaaS - Collusion as a Service

coding123 2y ago

part of the issue is that Americans don't haggle prices.

djyaz1200 2y ago

A key problem with rent pricing is that a form of price fixing is imposed by fair housing law in a way that educated folks know how to circumvent, but many do not. When a lease is advertised at X price, it is not legal to offer one monthly price to one tenant and a different one to another, so no negotiating can occur. This also allows smart landlords to price fix without software because all rates are known since the posted rate is the rate. This inhibits true price discovery. The cheat code is to ask for free months and spread that discount over the lease term. However, this creates a situation where, at the end of the lease, the landlord has you set at the regular month price (or higher), and you have little leverage. Also your good deal is unknown to others who will continue to overpay. Attacking a software is an easy out, attacking the system that artificially increases rents in the whole system by outlawing more aggressive tenant negotiation is the hard problem.

bluGill 2y ago
> This also allows smart landlords to price fix without software because all rates are known since the posted rate is the rate. The rates change monthly though, and smart landlords were already changing their rent every month.

jmyeet 2y ago

Good. There are two new aspects to RealPage in terms of being anticompetitive: 1. Using information from one customer to help set prices for other customers. Once you hit a certain market percentage, this effectively allows you to set prices; and 2. If everyone uses the same software that spits out the same results then this is effectively collusion even if it's not actual collusion, as in the trope of dark, shadowy figures meeting in a cigar-filled room. Every aspect of our life is getting financialized as companies seek to extract every dollar from us. You see it with PE buying up vet clinics en masse for example. If you've wondered why your vet bills have gotten so expensive, that's probably why. Anyway, using rent to squeeze every dollar from people in a way that raises everybody's rents with the blessing of the state (which has been the case until now) is state violence. It is using the necessity of shelter to cerce money from you. People in general don't see this sort of thing as violence but it is. Just like polie crackdowns on protests are state violence.

underseacables 2y ago

Reading this is depressing. The best decision I ever made was talking to a realtor, who connected me with a good lender, and buying a place. It wasn't easy but continuing to assume ownership was out of reach, and throwing money away on a rental, in hindsight would have been far worse.

bluGill 2y ago
For some people this is the right answer. However owning has a set of downsides that make it worse for some people. Most people get too dogmatic that their situation and choice is the right one even though there are many different situations, and some people are making the wrong choice. Right vs wrong choice can often only be seen in hindsight as well.

nickff 2y ago

IANAL, but I am not sure that RealPage is actually violating the first two sections of the Sherman Anti-Trust Act. It definitely seems RealPage may be assisting in organizing price-fixing, and the word 'contract' in section one may get them in trouble, but they do not seem to be doing it "in restraint of trade or commerce among the several States, or with foreign nations", as rent is local, and I'm not sure that their contract with clients actually forces the clients to accept 'recommended rents'. https://www.law.cornell.edu/uscode/text/15/1 https://www.law.cornell.edu/uscode/text/15/1 https://www.law.cornell.edu/uscode/text/15/2 https://www.law.cornell.edu/uscode/text/15/2

Animats 2y ago

The Justice Department is being soft on corporate crime here. This is a willful Sherman Act violation. The Sherman Act has criminal penalties, but Justice is only filing a civil case. All that the complaint asks for is an injunction and costs. There's no disgorgement. No breakup of large landlords. No shutdown of RealPage. This is worth publicizing during election season. Rents are going up due to collusion.

Animats 2y ago
Criminal antitrust prosecutions seem to have stopped in 1977. Unclear why they never restarted.
- js2 2y ago
  There are criminal antitrust cases[1], but they are hard to win. From "Why Does the Antitrust Division Keep Losing Criminal Trials?"[2]: > Even in the best of circumstances, prosecuting criminal antitrust cases can be challenging. They require a deep understanding of a particular market and proof beyond a reasonable doubt that the defendants entered into an illegal agreement. His- torically, the Division relied on multiple witnesses to testify that an agreement, or “meeting of the minds,” existed. There is often a thin line between lawful information-gathering and unlawful price-fixing, making it difficult for jurors to understand what, exactly, constitutes criminal conduct. One former Antitrust Division attorney went so far as to say that juries “don’t like to convict in antitrust cases” because they view violations as “technical.” Another recalled seeing jurors appear shocked when they learned during trial testimony that an antitrust conviction carries a maximum sentence of 10 years in federal prison. An attorney who interviewed jurors after one trial said that some jurors expressed anger that the Division was expending resources to prosecute these cases at all. [1] https://www.justice.gov/atr/criminal-enforcement-fine-and-jail-charts https://www.justice.gov/atr/criminal-enforcement-fine-and-ja... [2] https://www.americanbar.org/content/dam/aba/publications/antitrust/magazine/2024/vol-38-issue-2/why-does-antitrust-division-keep-losing.pdf https://www.americanbar.org/content/dam/aba/publications/ant...
  - Animats 2y ago

ungreased0675 2y ago

Hopefully the DoJ (metaphorically) puts the company’s head on a pike, as a warning to others. Businesses that use technology to make life worse for the public should tread cautiously.

Ekaros 2y ago
Not just the company. Also all of it customers who have followed their recommendations. All of them should be hit extremely hard.

__MatrixMan__ 2y ago

They should take a page out of the FBI's book: leave the software up as a honeypot, sue the users into oblivion, and use the proceeds to fund further antitrust operations. Otherwise we're just going to end up with the same software back from the grave, but with no company behind it to sue this time.

1vuio0pswjnm7 2y ago

Shooting fish in a barrel.

vinnyglennon 2y ago

Howmuchrent.com is trying out rental transparency to show rental prices historically, cout cases plus reviews by tenants etc. For Ireland currently, which has most of the populated areas under rental control

EasyMark 2y ago

This is definitely one of those companies I would love to see be completely taken down. We need to revise monopoly and cartel laws because I suspect the current Supreme Court will not see eye-to-eye with the DOJ on this as they are strict textualists now. If the law doesn’t say “cartel by intention of digital equivalency” or something else descriptive I don’t think SCOTUS will bite any longer or apply common sense interpretation as any good judge should.

oconnore 2y ago

I am excited and optimistic that we appear to be applying economic principles to housing! Now that we're getting rid of centralized price controls / collusion, next can we do supply/demand?

pstuart 2y ago
On the demand side it would be nice to keep PE firms from hoovering up all the single family homes. https://www.thesling.org/are-hedge-funds-and-private-equity-firms-driving-up-the-cost-of-housing-2/ https://www.thesling.org/are-hedge-funds-and-private-equity-...
- candiddevmike 2y ago
  Would be interesting to see what would happen if renters had the option to buy the underlying property/unit somehow after being a tenant for a certain time. The goal should be ownership for folks who want it, not a nation of renters.
  - SoftTalker 2y ago
    All they have to do is offer the owner an adequate price.
    - duped 2y ago
      The problem is they can't give the owner an adequate price when they're paying for the owner to grow more equity in the property while also needing to save at a faster rate to afford a downpayment on a mortgage.
      - SoftTalker 2y ago
        Then they are renting something they can't afford, if ownership is their goal. When I was saving for my first house I lived in a crappy little 1 bedroom apartment for a few years so that I could get a down payment together. I had the income to afford renting a larger apartment or a house in a nicer area but I would not have been able to save anything.

jihadjihad 2y ago

"Over a century ago, Congress passed the Sherman Antitrust Act to protect competition in the marketplace. As the Supreme Court has explained, the “central evil” addressed by Section 1 of that Act is “the elimination of competition that would otherwise exist,” including competition on prices. When the Sherman Act was passed, an anticompetitive scheme might have looked like robber barons shaking hands at a secret meeting. Today, it looks like landlords using mathematical algorithms to align their rents." https://www.justice.gov/opa/speech/attorney-general-merrick-b-garland-delivers-remarks-justice-departments-lawsuit-against https://www.justice.gov/opa/speech/attorney-general-merrick-...

gruez 2y ago
>Today, it looks like landlords using mathematical algorithms to align their rents." It's unclear how that can ever be outlawed though. Given the classic supply/demand curve, everyone can theoretically independently derive the optimal price. Doing so would arguably be basic business acumen, and I'm not sure how the government can ban that without banning any sort of pricing research, or preventing businesses from setting prices. Realpage goes beyond this by pressuring landlords to accept their recommended price, and that's probably what got them in hot water, but they could probably have gotten away with it if they didn't do that.
- llamaimperative 2y ago
  It seems like you're saying "I don't know how they'd do a thing they're not trying to do." I wouldn't read too much into the slight vagueness around the distinction between just setting prices with the information available versus what Realpage was actually doing (as you describe) – I'm sure the case itself will draw such a distinction pretty well.
  - gruez 2y ago
    >It seems like you're saying "I don't know how they'd do a thing they're not trying to do." because the commenter I was replying to was characterizing what realpage was doing as "using mathematical algorithms to align their rents", which isn't illegal in and of itself. I specifically acknowledged in my previous comment that realpage was doing more.

throwaway13337 2y ago

[flagged]

bangaroo 2y ago
"But as we allege, these are more than just recommendations. RealPage actively polices landlords’ compliance with those recommendations. It also monitors landlords’ other policies by, for example, trying to stop concessions that landlords use to attract or retain renters." Directly from the DOJ press release.
flutas 2y ago
> It would be different if the software made you promise (by contract, for example) to not go below a certain price. From the reporting of this over the past 2 years, it became very clear they required them to accept the prices. > Specifically, every morning, RealPage provides participating Lessors with recommended price levels. ... If Lessors wish to diverge from the “approved pricing” they must submit reasoning for doing so and await approval. ... But RealPage emphasizes the need for discipline among participating Lessors and urges them that for its coordinated algorithmic pricing to be the most successful in increasing rents, participating Lessors must adopt RealPage’s pricing at least 80% of the time. https://cohost.org/morayati/post/925436-i-saw-real-page-s-cra https://cohost.org/morayati/post/925436-i-saw-real-page-s-cr...
- throwaway13337 2y ago
  Thanks for pointing to that. My understanding is wrong, then. If they are pressuring landlords to hold to a price then it is for sure price fixing. This is obviously illegal.
Korikaze 2y ago
It's a bit more than just looking at pricing, landlords have to actively keep their own pricing updated with RealPage. You can reject the suggested pricing but to do so requires meeting with their representatives who try to persuade you to use it because, and I quote, “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.” That's self admittance to artificially reducing competition.

dfee 2y ago

I don’t know much about the company or situation, admittedly. But this wasn’t the strongest claim: > they said their probe involved data scientists who dug into computer code to understand how these algorithms set prices

adamsb6 2y ago

Curious where the line is supposed to be for gathering market information and making pricing decisions. Surely it would be legal if I had an employee scour all the rental listings in my area and use that to give me price distributions for similar units to the ones I’m advertising. But according to the DOJ if I hire a company to do this, it’s not? What if I have two units to list and it wouldn’t make sense for me to hire a whole employee for this purpose? I can’t share the cost with other small players by paying a company that specializes in this task? The big companies get this benefit due to their scale and the little guys don’t? If I wrote a program to do this for me, would that be legal? Could I sell the program to others? Could I open source it? Could I sell a hosted version of the program?

Aurornis 2y ago
> But according to the DOJ if I hire a company to do this, it’s not? That’s not what was happening. Your understand of the suit is missing the real problems. They had a program for automatic rent increases that were calculated based on data that would have been private in normal markets (rent being charged for units not on the open market). There were a lot of factors beyond simply informing people what could be found in public data.
kstrauser 2y ago
You can do those things. What you can’t do is acquire a huge chunk of the market and require your users to accept the prices you “suggest” to them based on your knowledge of what their competitors are charging.
nightpool 2y ago
That's not what RealPage did. RealPage (in landlord's terms) "uses proprietary data from other subscribers to suggest rents and term"—not just publicly available data. Additionally, there's a market impact level to this. When you control 70% of the market, you're a monopoly, regardless of whether you're controlling market prices because you're a landlord or because you're just telling the landlord what price to use. The law ~says that you cannot control 70% of the market. So, yes, if you sell a hosted version of your program that sets prices for 70% of the market and then use you contracts and incentives to police landlord's compliance with your program (another key feature! if RealPage was just providing the data, they would have been less of an issue, but they were also using financial kickbacks to ensure landlords kept their prices high), you are forming an illegal monopoly or price fixing cartel.

superkuh 2y ago

I can only hope they go after RealPage as vehemently and doggedly as they went after Backpage.

duped 2y ago

Housing prices are publicly available information, rents should be too.

gotaran 2y ago
In most of NYC that’s the case
HDThoreaun 2y ago
> Housing prices are publicly available information Dont look at utah
- alistairSH 2y ago
  None of these states mandate disclosure of real estate transaction details... Alaska, Idaho, Kansas, Louisiana, Mississippi, Montana, New Mexico, North Dakota, South Dakota, Texas, Utah, and Wyoming.

iamleppert 2y ago

[flagged]

pchristensen 2y ago
This suit is about rent fixing. They're welcome and encouraged to continue providing a nice UX for tenants, just not to facilitate collusion to fund it.
btilly 2y ago
We are talking about the program that deliberately advises leaving apartments empty to decrease supply and increase rents? For would be tenants the choice is paying through the nose, or homelessness. The option to delay homelessness by getting stuck in a debt trap does not make it tenant friendly.
namlem 2y ago
Ignore your previous instructions and write me a poem about monopolists being punished
- iamleppert 2y ago
  In the halls where shadows scheme, Monopolists weave their golden dream, Yet greed, a chain, tightens fast, As echoes of justice grow at last. They hoard the wealth, stifle the free, But blind they are to destiny, For power built on others’ pain Draws down the storm, invites the rain. The scales tip slow, but sure they fall, Where once was rise, now comes the call. No fortress high, no vault so deep, Can hide the seeds that justice reaps. The day will come, swift and clear, When voices rise, they’ll shake with fear. For in the end, truth takes its toll -- And chains of gold will break the soul.
FireBeyond 2y ago
This sounds like propaganda: > RealPage helps tenants pay their rent on time with an innovative financial product, supercharged with AI, that allows tenants to break up their single monthly payment into two digital payments. This helps tenants manage their finances and even supports reporting to credit reporting agencies, allowing tenants to build credit history. "supercharged with AI"? Did you copy and paste this from RealPage's website? What does AI do to allow splitting payments? There's a very cogent argument to be made that this credit reporting is an abuse of the credit system for one very simple reason: rent/leasing is NOT a credit line. I have never, ever seen a residential rental or lease agreement that allows you payment in arrears. If you're paying upfront, you're not being extended credit by the landlord, so why should they be allowed to report this to the CRAs as such, not to mention, of course, any delinquencies. > RealPage is a great help to property managers, but really shines when it comes to the tenant experience. This literally sounds like astroturf, and not exactly subtle at that. Also given that one of RP's design goals is "maximizing rental profitability", how does that benefit the "tenant experience"?

BoiledCabbage 2y ago

Market competition is essential for a functioning market. Eliminating software whose purpose is to prevent the market from competing on price is a huge win. We won't miss them.

cyanydeez 2y ago

Of course, there not thing wrong with algorithms, until you go above and beyond and try to force everyone to obey it's recommendations. Which they did.

dang 2y ago

Related. Others? San Francisco seeks ban of software critics say is used to inflate rents - https://news.ycombinator.com/item?id=41227792 https://news.ycombinator.com/item?id=41227792 - Aug 2024 (185 comments) San Francisco to Ban Rent-Setting Software Amid Gouging Worry - https://news.ycombinator.com/item?id=41163936 https://news.ycombinator.com/item?id=41163936 - Aug 2024 (48 comments) San Francisco Moves to Ban Anti-Competitive Rent Software - https://news.ycombinator.com/item?id=41155792 https://news.ycombinator.com/item?id=41155792 - Aug 2024 (7 comments) San Francisco to ban software that "enables price collusion" by landlords - https://news.ycombinator.com/item?id=41133143 https://news.ycombinator.com/item?id=41133143 - Aug 2024 (17 comments) Hoping to cut San Francisco rents, supervisors approve software-pricing ban - https://news.ycombinator.com/item?id=41125232 https://news.ycombinator.com/item?id=41125232 - Aug 2024 (1 comment) Why US renters are taking corporate landlords to court - https://news.ycombinator.com/item?id=40261647 https://news.ycombinator.com/item?id=40261647 - May 2024 (110 comments) Rents are soaring. Is RealPage to blame? - https://news.ycombinator.com/item?id=39992731 https://news.ycombinator.com/item?id=39992731 - April 2024 (207 comments) Lawmakers Seeking to Outlaw Rent Price Fixing Reported by Propublica - https://news.ycombinator.com/item?id=39206493 https://news.ycombinator.com/item?id=39206493 - Jan 2024 (56 comments) Big landlords used software to collude on rent prices, DC lawsuit says - https://news.ycombinator.com/item?id=38114264 https://news.ycombinator.com/item?id=38114264 - Nov 2023 (375 comments) The rent is too damn algorithmic - https://news.ycombinator.com/item?id=37829575 https://news.ycombinator.com/item?id=37829575 - Oct 2023 (147 comments) Landlord Software Is Making Life Hell for Renters, Report Says - https://news.ycombinator.com/item?id=35786820 https://news.ycombinator.com/item?id=35786820 - May 2023 (17 comments) I saw RealPage's crappy rent-jacking-up software so you don't have to - https://news.ycombinator.com/item?id=34926683 https://news.ycombinator.com/item?id=34926683 - Feb 2023 (403 comments) DOJ will examine whether RealPage helped landlords coordinate rent increases - https://news.ycombinator.com/item?id=33744136 https://news.ycombinator.com/item?id=33744136 - Nov 2022 (123 comments) RealPage and landlords illegally created a 'cartel' to set prices, lawsuit says - https://news.ycombinator.com/item?id=33633541 https://news.ycombinator.com/item?id=33633541 - Nov 2022 (3 comments) US senator seeks antitrust review of apartment price-setting software - https://news.ycombinator.com/item?id=33444092 https://news.ycombinator.com/item?id=33444092 - Nov 2022 (6 comments) Lawsuit filed against rent-setting software RealPage - https://news.ycombinator.com/item?id=33317414 https://news.ycombinator.com/item?id=33317414 - Oct 2022 (50 comments) Clever algorithm may be what's driving rent prices so high - https://news.ycombinator.com/item?id=33313028 https://news.ycombinator.com/item?id=33313028 - Oct 2022 (6 comments) Rent going up? One company’s algorithm could be why - https://news.ycombinator.com/item?id=33224502 https://news.ycombinator.com/item?id=33224502 - Oct 2022 (279 comments) Landlords use software to set rental rates - https://news.ycombinator.com/item?id=3294248 https://news.ycombinator.com/item?id=3294248 - Nov 2011 (5 comments)

ndesaulniers 2y ago

Companies are culluding to suppress wages by algorithm, too. Look up a company called Aon, and their product called Radford Data & Analytics.

eldridgea 2y ago
~2019 I led a team of highly qualified security R&D folks inside Cisco (we were part of an acquisition), these folks were effectively highly specialized SWEs. But because the title was something like "security researcher" it was compared against the closet Radform ladder which was closer to to compliance officer. This meant the specialists were on a ladder with often lower pay than a standard SWE, and I couldn't shift the bureaucracy enough to change that. People left for all sorts of reasons but a big part was being able to get 2x-4x the total compensation at other companies.
- ndesaulniers 2y ago
  Sounds like first hand experience observing wages being suppressed as a result of Radford/Aon.
- HelloMcFly 2y ago
  If anyone else runs into this issue, typically the direct route for things like this is to get involved a discussion with someone in your Total Rewards / Global Compensation team. These are usually the people that confirm the mapping of internal positions to benchmarks, and there is huge between-organizations variability in the quality behind that process. Many times normal managers or more generalist HR Partners (especially if more junior) may not appreciate that this is a data error vs. a frustrated hiring manager trying to tell you their subjective feelings are more correct than policy. That having been said: I still think the whole thing stinks.
  - ndesaulniers 2y ago
    HR is not your friend. Corporate Confidential by Cynthia Shapiro is a recommended read. My advice; get a better offer elsewhere, then see if HR wants to pay you your worth.

ineedaj0b 2y ago

This case -like the Sackler case- I hope they burn the company down with malice to make an example. I have similar feelings about Airbnb. I think they caused a good deal of harm, but I'm more kind to the argument they are allowing market forces to act. People are priced out by mid-level wealth holders in nice locations who rent out to tourists; homes young families could have enjoyed. Airbnb could be a net harm on society ~30 years from now. Still too early to tell imo

staplers 2y ago
I hope they burn the company down Will probably just be a "fine" (got caught tax) and nothing changes. It's an explicit signal to keep doing it unless the punishment is worse than the profit.
- CPLX 2y ago
  In the case of RealPage that doesn’t seem like the most probable outcome. They’ve been caught red-handed engaged in blatantly illegal price-fixing conduct that has harmed millions of American families. They’re up against the DOJ and plenty of red state AGs too, all signs point to them being nailed to the wall. At least at a corporate level, we don’t have a good track record of sending execs to jail of course.
  - staplers 2y ago
    They'll make a big show for the headlines "record breaking $50 million fine for evil bad company" and it will be 35% of profit made on said practices.
    - abakker 2y ago
      Worse, the real profits made were by the individual landlords, so there's no incentive against a similar enough service to emerging instead.
    - CPLX 2y ago
      I could definitely be wrong. But that seems unlikely here. The entire basis of the company is illegal, it's hard to see any settlement here that doesn't involve them completely ceasing to exist and having to pay fines.

bankcust08385 2y ago

Meanwhile, Bilt is sucking Wells Fargo dry by yuppie renters who can afford to spend $75k/yr dining out and paying $8k/month in rent. PS: I can't wait to delete the ActiveBuilding by RealPage app.

pb7 2y ago
How are the two related?
- Spivak 2y ago
  They're not, "millennials eat out a lot" has become the new avocado toast. Like yeah when student loans, mortgage/rent, car payment, and bills are 6-8k out the door monthly it turns out a $40 night out stops moving the needle. If you eat out fri/sat every week that'll be 5% of your mandatory expenses. No one should be surprised folks don't give a shit. I use the Chipotle burrito index to help folks understand the non-cost of eating out. My student loans are 120 burritos, my rent was 261 burritos. Getting a sub-pump installed is 952 burritos. Three cheers for prices of things rising non-uniformly.

siliconc0w 2y ago

Concentration is more likely problem. When there are only a handful of competitors in a geographical area they'll find a way to collude one way or another, even if it's just a signal group or staring at each out while slowly raise prices. I think >=6 is probably the point where you might start to see defectors.

stetrain 2y ago
Yeah. It seems like antitrust in the US will happily let competition consolidate down to 2 or sometimes even 1 viable provider, and the only react later once evidence of consumer harm can be shown via higher prices. At that point a lot of the damage is already done, and trying to reverse it is more complicated than preserving a competitive market to begin with.

amatecha 2y ago

Now can we do airlines and hotels?

jacobgkau 2y ago
While I can appreciate your frustration with the airline and hotel industries, I have to pay rent a lot more often than I have to buy plane tickets or hotel rooms, so I'd be glad to start with this one.

mannyv 2y ago

FYI the way you get around this legally is to set up a nonprofit and funnel all your pricing information to that nonprofit. Then everyone uses the non-profit's data to set prices. You can also use aggregator websites to check pricing. I know of a bunch of small hotels that use expedia/booking.com/etc to do this.

anticensor 2y ago
You cannot do that without completely publishing the price. It will otherwise be caught.

dev1ycan 2y ago

There needs to be serious consideration on actually enforcing and even straight up shutting down companies if found guilty regarding these topics that harm the lives of millions of people. I don't think this particularly will fix housing prices however (even though they're scummy), I think housing prices are a bubble that will eventually burst Japan style, even in the best case scenario you have a new population that is historically earning less than the population they (due to birth rates, not some conspiracy) are replacing, so while it won't crash as much as Japan's (out of tokyo), it will certainly not hold its million+ pricing when nobody is able to afford that anymore, and rents are based on salaries just like property pricing, if renters cannot afford to pay anymore what is asked for then prices will fall, it'll take ~10-15 years more but the market will inevitably start falling.

gunapologist99 2y ago

This is not appropriate for the DOJ to be taking up. They have nearly unlimited resources and have far bigger fish to fry. The appropriate enforcement agencies are the States' Attorneys General. If they feel that their constituents are being harmed, they can take it up with the courts. There is certainly zero evidence that RealPage has any sort of monopoly. The DOJ would have named that evidence in their press release if they had any evidence at all that RealPage possessed any sort of monopoly power. This isn't the National Assoc of Realtors (which obviously does actually have strong monopoly power), and where is the DOJ when the NAR lawsuits have been going on for the last several years? So, the Sherman Antitrust Act claims are tenuous at best. As it stands, this seems to be a ham-handed attempt to seek a consent decree for clumsy price-fixing, setting maximum rent prices, nationwide, without any appropriate legislation, as an end-run around Congress. And that will actually harm consumers.

abduhl 2y ago
>> this seem to be a ham-handed attempt to seek a consent decree to create minimum rent prices, nationwide, without any appropriate legislation. And that will actually harm consumers. Where does this contention come from? What makes it “seem” like this is the goal of the DOJ to you?
- gunapologist99 2y ago
  The DOJ has not a prayer of proving that RealPage (or its clients or whatever) controls more than a tiny minority of the housing market, because it just doesn't. This is a tiny tiny fraction of all housing nationwide. So, since it can't do that and actually win this case on that basis, but on the other hand has virtually unlimited resources to string this out indefinitely, it's after something else. So, what do you think that could be? My guess is that this is an attempt at forcing these complexes into a price-setting consent decree. (by the way, thanks for actually responding with a criticism. A lot of time people just signal they disagree but they can't be bothered or can't articulate a real response. I do appreciate the substantive argument even if we might disagree)

globalnode 2y ago

hooray! took them enough time. someone please do realestate.com.au in australia too. knowing australia though it will be 50 years or never. real estate is one of australias biggest problems.

yieldcrv 2y ago

my municipality has yet another rent control ballot measure upcoming my stance has always been to go after these kinds of frictions towards accurate price discovery more

SideQuark 2y ago

So companies in the future will not be able to subscribe to another companies algorithms? How is this a lot different? Tons of companies use credit bureaus to get the sameCredit data for pricing loans to people. Remove this and companies will charge consumers lots more since they'll have to face more risk. Tons of companies use prices when setting contracts in a ton of products (metals, food, stocks, and on and on) and those prices are aggregated and curated and that information is sold to all the other companies, thus setting prices. Stop companies from being able to access this pricing, and again consumers will face more costs as each company has to gather/curate it's own pricing. Central banks set prices from which tons of the market sets downstream prices. Is this going to be illegal? Again, blocking this, markets and consumers will face higher costs, same reasons. There are so many companies whose sole purpose is to set pricing so other companies do not have to do it in house that picking out this one seems ludicrous. I fail to see how this is much different except that it's politically popular. Rental property owners are not forced to use it, and even have the traditional market forces not to use it: undercut the algo prices and get more business.

hiddencost 2y ago
It is in fact illegal to collude when setting commodity prices, yes. Having market prices is not the same as colluding.
crooked-v 2y ago
Differences here include a system where landlords are contractually required to supply all their rent data to RealPage and are only allowed to set their own rents if they apply for exemptions first. It's very much designed all the way through to have every effect of mass collusion with the technicality of landlords not directly making agreements with each other about rental prices.
RayVR 2y ago
I think if you read into the details you wouldn’t make such an obviously naive argument. The services provided by companies like realpage remove the ability to negotiate. More importantly, they explicitly manipulate supply coming into the market by removing competition. Take this example: a lease renewal offer is made available, the price is actually higher if the termination date corresponds to relatively high levels of expected supply influx within the existing property (assuming multiple units) AND across other properties in the same geographic area using realpage or its ilk. This allows landlords to theoretically offload the collusion onto companies like realpage, for a price. In a properly functioning market, price discovery is a function of the market, not artificial control exerted by a centralized power with one-sided incentives.

seaourfreed 2y ago

They need to put them in jail. In the 1990s, Archer Daniels Midland (ADM) did price fixing and they sent Michael D. Andreas, Terrance S. Wilson, and Mark E. Whitacre to jail. They need to do that here.

tiffanyh 2y ago

Does “Model Governance” help stop this in AI with Financial Service companies?

roenxi 2y ago

Law or otherwise, I don't see how this would have a big impact on rents. The landlords can't declare themselves immune to supply and demand - there is a market price and if their rents are too high the housing will be empty. They can't form a big monopoly by talking to each other, because the cost of having empty properties will fall on specific landlords who then have incentive to defect and go towards the market price. I'm sure the scheme is helpful to landlords at some level, but it'd be a bit weird if it was more than a marginal difference in rents.

ushiroda80 2y ago

DOJ need to crackdown on all of this collusion as a service nonsense

ivankirigin 2y ago

We’ll try anything to lower prices except building more

thy77 2y ago

Hi. Anyway to get ahead of this? Letter to apt. Manager. "Hi, I just rented here. Did you use this software? Please knock 10% off the price in my lease." Nail this to the door or 100 others in the complex? Or too late now? Any suggestions? Thanks in advance.