8 ms·

>Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” function

by 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. *
  - everforward 2y ago
    I don’t think they’re talking about the price they’re renting the apartment for; I can’t imagine that number is secret in any meaningful sense of the word. Who rents an apartment without knowing the price? I think they’re talking about more sensitive internal numbers. What are the costs and margins on the unit? How quickly are units moving at a certain price? What’s the turnover at particular prices? I think the core mechanics bear some similarities to insider trading, with a third party “washing” the non-public information.
    - stackskipton 2y ago
      Another big one is when do the leases end for inventory control. RealPage is why Apartment dwellers report getting options to renew at cheapest price for odd number of months like 17. Realpage is trying to prevent a bunch of leases ending and flooding the market.
    - kpw94 2y ago
      > I think they’re talking about more sensitive internal numbers. What are the costs and margins on the unit? How quickly are units moving at a certain price? What’s the turnover at particular prices? Yeah that's my understanding of it too "competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates and other lease terms". I.e. realPage has an oracle view of all the lease ending times etc, so it knows for instance, this next July there's going to be very few availability, so boost all the rents by X% I guess there's a "private price" if the apartment complex share what, after all negotiations, the renter ended up signing for. It can be more than what was on the public website, if they ended up signing for a shorter lease, or less if the apartment ended up needing to throw in "first month free" etc. There's also private price of lease renewals done before the unit is put for rent on the website.
- bluGill 2y ago
  There is more than just pricing at question here. If you go to your typical local gas station with a 5000 gallon tank and fill up the station will raise their prices above the other stations in the area because they will only have a small amount of gas in their tanks and so they want everyone to go elsewhere until the next delivery fills the tanks up again. (depending on when you fill up the station may not even have 5000 gallons in their tanks.) How much tank is left at any station is NOT public information shared with other stations in the area. RealPage though has information on how many apartments are empty and uses that in algorithms even though it isn't public information.
- hnburnsy 2y ago
  >are publicly available The list price is different than the final accepted monthly rate\term for the renter. Realpage is getting the actual rental information. In addition, the occupancy of the building is also not public data.
tmoertel 2y ago
The classic way that businesses openly coordinate their pricing is via price matching. Businesses advertise their preferred prices but also promise that they'll match lower prices from competitors. Competitors see these advertisements and set their own prices to approximately match. The FTC does not consider this type of open signaling to be price fixing: > Q: Our company monitors competitors' ads, and we sometimes offer to match special discounts or sales incentives for consumers. Is this a problem? > A: No. Matching competitors' pricing may be good business, and occurs often in highly competitive markets. Each company is free to set its own prices, and it may charge the same price as its competitors as long as the decision was not based on any agreement or coordination with a competitor. Source: https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing#:~:text=A:%20No.%20Matching%20competitors'%20pricing https://www.ftc.gov/advice-guidance/competition-guidance/gui...
- pixl97 2y ago
  Price matching was something that really worked in the past, again in the days before mass digitization and cheap storage/printing. Add in there are only a few major retailers left, it becomes easy to make a product for each of them. CostCow will have product 0ICU812a WalWart will have product 0ICU812b Then they don't have to actually price match because they are "different products"
  - codedokode 2y ago
    Online stores seem to match prices; when I google for some electronic equipment (like headphones or MIDI controllers), many stores have almost equal prices for the same item. Of course there is a chance that all they are owned by the same entity, but it is not very plausible.
    - willcipriano 2y ago
      That's probably the MSRP for the item. (https://www.investopedia.com/terms/m/manufacturers-suggested-retail-price-msrp.asp https://www.investopedia.com/terms/m/manufacturers-suggested...)
bogwog 2y ago
I think you're over analyzing and confusing things. Price fixing is when competitors work together to raise prices above what they would normally be in a competitive market. Using your gas station example, a gas station isn't going to look at a competitor selling gas at $4.15 and decide to raise their price to $4.45. They would lower their price to match the competition, otherwise they'd lose sales and make less money. Price fixing would be if both gas stations decided to raise their price to $4.45 at the same time so that customers don't have a choice.
- andrew_eu 2y ago
  The analogy also works in the opposite direction. If a gas station is selling at $4.10 a gallon and another down the street is selling at $4.15, the first gas station could happily up their price to $4.14. 1% more revenue and they're still the cheapest on the block.
  - oooyay 2y ago
    Competitive markets keep things within a tolerance, imo. If the average is $4.10 then you can expect the price to vary up and down by some amount depending on location and other things provided. What RealPage does is distinct because it assures prices are always above and by orders of magnitude what they should be. It also achieves that through private communication which I think is generally accepted as a problem.
    - coredog64 2y ago
      Order of magnitude is generally accepted as starting at 10x. Are you saying rents are 10-100x higher because of RealPage?
      - oooyay 2y ago
        You're right, order of magnitude wasn't the right choice of words. They're 3-4x what they should be, and RealPage is responsible for a sizeable portion on its own, which is saying something.
PeterisP 2y ago
"compliance" alone is a sufficient misbehavior. No matter how people get to a price number, you can't have a contract or any other mechanism for the competitors to try and enforce the coordinated price, that's straight out wrong by itself.
tqi 2y ago
What I'm having a hard time understanding is why RealPage cared about "compliance" in the first place - do they charge as a % of rent? That seems nuts, I would imagine landlords hate that. If not % of rent then I can't understand why the company would want rents to be higher across the board.
- ZeoVII 2y ago
  IMO, because that way they can claim to landlords they get target ocupancy rates with the higher price; if one landlord in the area knows the price others get, he could try to get higher occupancy rate by lowering his price, aka "competition", by requiring "compliance" to RealPage prices, they are effectively coordinating and price fixing the market, which is the ilegal part. After all, landlords could see regular posing on other channels and adjust their prices in the "normal" way.
- lobsterthief 2y ago
  Because then they can say “hey landlord, on average if you list through us you can charge X% higher rents than our competitors”
- codedokode 2y ago
  Maybe they want to attract landlords to sign up, and making rent raise works better than any advertisement.
- andrewmutz 2y ago
  I built software for this industry (not at realpage) for 10+ years and can explain why price compliance is a big deal. The reason is that there is a fundamental principal vs. agent problem in the fee-based property management industry. Usually an investor buys a building and then hires a separate corporation called a fee-based property management company to manage the property. The management company gets to keep 8-10% of the rents that come in exchange for doing all the management work. (there are situations where the owner and the manager are the same corporation but they are less common and are called owner-operators) The fee-based management company and the building owner have different interests. The building owner wants to maximize net operating income, which usually means maximizing revenue. The fee based manager wants to maximize their earnings, which is the 8-10% of the rents minus paying for all the management work to happen. On first glance you might think these are similar interests, but when it comes to choosing the price they are not the same. If a rental price is optimal, it takes a bit of work to rent it out. The housing unit will sit on the market for a little bit and be shown to a lot of people before you find someone willing to pay the price. If, on the other hand, the price is 10% below the optimal price, it will take very little work to rent out and will be taken by the first person who comes to look at it. In this case "little work" means the management company can save money by paying fewer staff members. So, property owners want optimal prices and property managers want prices that are slightly lower than that. Revenue management algorithm compliance is a solution to this principal agent problem. The building owner insists on it being used by the management company because he doesnt trust the management company to choose prices. He doesnt trust the management company to choose the price because they are motivated to lower the price in order to reduce their workload. High price algorithm compliance is important to realpage because it is how the owner makes sure the manager is choosing prices that maximize the owners interests, rather than the management company's interest. And the owner is the person who chooses to enforce the pricing algorithm, and thus the true customer of realpage when it comes to revenue management algorithms.
A4ET8a8uTh0 2y ago
I think the major differentiator here is that in the examples provided, everyone has access ( even if it is for a price ). When it comes of equifac work number or realpage data, it seems to be available to only a subset of population, which is problematic. I want to know what a given corporation is paying.
spaceguillotine 2y ago
Recently in used car shopping i've found KBB only gets used when they are pricing trade ins but the cars for sale on the lot have been much higher than the book value and they scoff when you ask them to come down to the KBB used car value that matches, no wonder so many car lots are closing shop.

by jasode 2y ago

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. *
- everforward 2y ago
  I don’t think they’re talking about the price they’re renting the apartment for; I can’t imagine that number is secret in any meaningful sense of the word. Who rents an apartment without knowing the price? I think they’re talking about more sensitive internal numbers. What are the costs and margins on the unit? How quickly are units moving at a certain price? What’s the turnover at particular prices? I think the core mechanics bear some similarities to insider trading, with a third party “washing” the non-public information.
  - stackskipton 2y ago
    Another big one is when do the leases end for inventory control. RealPage is why Apartment dwellers report getting options to renew at cheapest price for odd number of months like 17. Realpage is trying to prevent a bunch of leases ending and flooding the market.
  - kpw94 2y ago
    > I think they’re talking about more sensitive internal numbers. What are the costs and margins on the unit? How quickly are units moving at a certain price? What’s the turnover at particular prices? Yeah that's my understanding of it too "competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates and other lease terms". I.e. realPage has an oracle view of all the lease ending times etc, so it knows for instance, this next July there's going to be very few availability, so boost all the rents by X% I guess there's a "private price" if the apartment complex share what, after all negotiations, the renter ended up signing for. It can be more than what was on the public website, if they ended up signing for a shorter lease, or less if the apartment ended up needing to throw in "first month free" etc. There's also private price of lease renewals done before the unit is put for rent on the website.
bluGill 2y ago
There is more than just pricing at question here. If you go to your typical local gas station with a 5000 gallon tank and fill up the station will raise their prices above the other stations in the area because they will only have a small amount of gas in their tanks and so they want everyone to go elsewhere until the next delivery fills the tanks up again. (depending on when you fill up the station may not even have 5000 gallons in their tanks.) How much tank is left at any station is NOT public information shared with other stations in the area. RealPage though has information on how many apartments are empty and uses that in algorithms even though it isn't public information.
hnburnsy 2y ago
>are publicly available The list price is different than the final accepted monthly rate\term for the renter. Realpage is getting the actual rental information. In addition, the occupancy of the building is also not public data.

tmoertel 2y ago

The classic way that businesses openly coordinate their pricing is via price matching. Businesses advertise their preferred prices but also promise that they'll match lower prices from competitors. Competitors see these advertisements and set their own prices to approximately match. The FTC does not consider this type of open signaling to be price fixing: > Q: Our company monitors competitors' ads, and we sometimes offer to match special discounts or sales incentives for consumers. Is this a problem? > A: No. Matching competitors' pricing may be good business, and occurs often in highly competitive markets. Each company is free to set its own prices, and it may charge the same price as its competitors as long as the decision was not based on any agreement or coordination with a competitor. Source: https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/dealings-competitors/price-fixing#:~:text=A:%20No.%20Matching%20competitors'%20pricing https://www.ftc.gov/advice-guidance/competition-guidance/gui...

pixl97 2y ago
Price matching was something that really worked in the past, again in the days before mass digitization and cheap storage/printing. Add in there are only a few major retailers left, it becomes easy to make a product for each of them. CostCow will have product 0ICU812a WalWart will have product 0ICU812b Then they don't have to actually price match because they are "different products"
- codedokode 2y ago
  Online stores seem to match prices; when I google for some electronic equipment (like headphones or MIDI controllers), many stores have almost equal prices for the same item. Of course there is a chance that all they are owned by the same entity, but it is not very plausible.
  - willcipriano 2y ago
    That's probably the MSRP for the item. (https://www.investopedia.com/terms/m/manufacturers-suggested-retail-price-msrp.asp https://www.investopedia.com/terms/m/manufacturers-suggested...)

bogwog 2y ago

I think you're over analyzing and confusing things. Price fixing is when competitors work together to raise prices above what they would normally be in a competitive market. Using your gas station example, a gas station isn't going to look at a competitor selling gas at $4.15 and decide to raise their price to $4.45. They would lower their price to match the competition, otherwise they'd lose sales and make less money. Price fixing would be if both gas stations decided to raise their price to $4.45 at the same time so that customers don't have a choice.

andrew_eu 2y ago
The analogy also works in the opposite direction. If a gas station is selling at $4.10 a gallon and another down the street is selling at $4.15, the first gas station could happily up their price to $4.14. 1% more revenue and they're still the cheapest on the block.
- oooyay 2y ago
  Competitive markets keep things within a tolerance, imo. If the average is $4.10 then you can expect the price to vary up and down by some amount depending on location and other things provided. What RealPage does is distinct because it assures prices are always above and by orders of magnitude what they should be. It also achieves that through private communication which I think is generally accepted as a problem.
  - coredog64 2y ago
    Order of magnitude is generally accepted as starting at 10x. Are you saying rents are 10-100x higher because of RealPage?
    - oooyay 2y ago
      You're right, order of magnitude wasn't the right choice of words. They're 3-4x what they should be, and RealPage is responsible for a sizeable portion on its own, which is saying something.

PeterisP 2y ago

"compliance" alone is a sufficient misbehavior. No matter how people get to a price number, you can't have a contract or any other mechanism for the competitors to try and enforce the coordinated price, that's straight out wrong by itself.

tqi 2y ago

What I'm having a hard time understanding is why RealPage cared about "compliance" in the first place - do they charge as a % of rent? That seems nuts, I would imagine landlords hate that. If not % of rent then I can't understand why the company would want rents to be higher across the board.

ZeoVII 2y ago
IMO, because that way they can claim to landlords they get target ocupancy rates with the higher price; if one landlord in the area knows the price others get, he could try to get higher occupancy rate by lowering his price, aka "competition", by requiring "compliance" to RealPage prices, they are effectively coordinating and price fixing the market, which is the ilegal part. After all, landlords could see regular posing on other channels and adjust their prices in the "normal" way.
lobsterthief 2y ago
Because then they can say “hey landlord, on average if you list through us you can charge X% higher rents than our competitors”
codedokode 2y ago
Maybe they want to attract landlords to sign up, and making rent raise works better than any advertisement.
andrewmutz 2y ago
I built software for this industry (not at realpage) for 10+ years and can explain why price compliance is a big deal. The reason is that there is a fundamental principal vs. agent problem in the fee-based property management industry. Usually an investor buys a building and then hires a separate corporation called a fee-based property management company to manage the property. The management company gets to keep 8-10% of the rents that come in exchange for doing all the management work. (there are situations where the owner and the manager are the same corporation but they are less common and are called owner-operators) The fee-based management company and the building owner have different interests. The building owner wants to maximize net operating income, which usually means maximizing revenue. The fee based manager wants to maximize their earnings, which is the 8-10% of the rents minus paying for all the management work to happen. On first glance you might think these are similar interests, but when it comes to choosing the price they are not the same. If a rental price is optimal, it takes a bit of work to rent it out. The housing unit will sit on the market for a little bit and be shown to a lot of people before you find someone willing to pay the price. If, on the other hand, the price is 10% below the optimal price, it will take very little work to rent out and will be taken by the first person who comes to look at it. In this case "little work" means the management company can save money by paying fewer staff members. So, property owners want optimal prices and property managers want prices that are slightly lower than that. Revenue management algorithm compliance is a solution to this principal agent problem. The building owner insists on it being used by the management company because he doesnt trust the management company to choose prices. He doesnt trust the management company to choose the price because they are motivated to lower the price in order to reduce their workload. High price algorithm compliance is important to realpage because it is how the owner makes sure the manager is choosing prices that maximize the owners interests, rather than the management company's interest. And the owner is the person who chooses to enforce the pricing algorithm, and thus the true customer of realpage when it comes to revenue management algorithms.

A4ET8a8uTh0 2y ago

I think the major differentiator here is that in the examples provided, everyone has access ( even if it is for a price ). When it comes of equifac work number or realpage data, it seems to be available to only a subset of population, which is problematic. I want to know what a given corporation is paying.

spaceguillotine 2y ago

Recently in used car shopping i've found KBB only gets used when they are pricing trade ins but the cars for sale on the lot have been much higher than the book value and they scoff when you ask them to come down to the KBB used car value that matches, no wonder so many car lots are closing shop.