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"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”

"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.
    - llamaimperative 2y ago
      That wasn't the commentator here, that was a quote from the opening (verbal) remarks. I.e. commentator + DOJ + you + I all know the distinction being drawn by the case, the AG just didn't dive into it in the first 3 sentences of his opening remarks on the case.
- spencerflem 2y ago
  The optimal rent for who? The point is that if Everyone has higher prices, because you can't not have a place to live people will be forced to pay more
  - gruez 2y ago
    The market clearing price on supply-demand curve.
    - anticensor 2y ago
      No, the highest possible price that anyone would be willing to pay.
- advael 2y ago
  There's a huge difference between researching your competition and coordinating with them. In effect, Realpage is acting as a mechanism for landlords to coordinate prices collaboratively rather than competitively. It just hopes to get away with it by having them outsource the analysis part of this to a third party. It likely would have gotten caught sooner if it weren't for the nonsensical attitude regulators have taken toward software products, where using a computer to do something is treated as somehow different from simply doing it
  - gruez 2y ago
    >There's a huge difference between researching your competition and coordinating with them If you read my comment carefully, you'd see that I was specifically talking about "independently derive the optimal price", not any sort of coordination.
    - advael 2y ago
      If you read my comment at all, you'd notice it leads with drawing a distinction between your hypothetical scenario and the actual case at hand. If you read my comment carefully, you might also notice that I'm being extra charitable by not pointing out that your hypothetical relies on oversimplifying how pricing signals operate in the real world. Of course you can make the problem seem to go away if you demand a simplification that elides all the details relevant to the problem.
      - gruez 2y ago
        >If you read my comment at all, you'd notice it leads with drawing a distinction between your hypothetical scenario and the actual case at hand. And that distinction was specifically acknowledged in my original comment. "Realpage goes beyond this by pressuring landlords to accept their recommended price, and that's probably what got them in hot water" >If you read my comment carefully, you might also notice that I'm being extra charitable by not pointing out that your hypothetical relies on oversimplifying how pricing signals operate in the real world. Of course you can make the problem seem to go away if you demand a simplification that elides all the details relevant to the problem. How does "how pricing signals operate in the real world" prevent my model from working? All you need is some sort of market research firm to provide key statistics like vacancy rate, disposable income, and average rent, and every landlord can arrive at approximately the same same rent.
- JumpCrisscross 2y ago
  > unclear how that can ever be outlawed though There are certain categories of information that you are legally prohibited from sharing with your competitors. How you will set prices in the future is one of them [1]. Whether competitors agree on a specific price or a system of pricing (e.g. X per square foot, or raise rent 1% every year except prime numbers when rent goes up 10%, or raise rent by the last number of the month's lottery number) is irrelevant. A landlord looking at RealPage's YieldStar price could be confident they wouldn't be undercut in the same way someone who's made a handshake deal with their competitors would. Where this crosses into liability for RealPage is if they knew this was how their tool was being used, or worse, marketed it as such. From what I've read, that seems to be the case. [1] https://www.justice.gov/archives/jm/antitrust-resource-manual-2-antitrust-division-field-offices https://www.justice.gov/archives/jm/antitrust-resource-manua...
  - gruez 2y ago
    >There are certain categories of information that you are legally prohibited from sharing with your competitors. How you will set prices in the future is one of them [1]. Right, but if you read my comment more carefully, I was specifically talking about the case where everyone derives the optimal price independently. Nowhere is sharing the price with your competitor mentioned.
    - JumpCrisscross 2y ago
      > I was specifically talking about the case where everyone derives the optimal price independently If you're using the same model you know your competitors use it isn't an independent derivation.
      - gruez 2y ago
        What if there's only one plausible model rent valuation, or there's multiple plausible models that spit out basically the same number? For instance, options are widely priced using the black-scholes model, because that's basically the state of the art. Is everyone using that model engaging in price collusion as well? Sure, there might be a bunch of parameters that are adjustable that each landlord has to come up with themselves, but with access to enough data each landlord crunch the numbers and converge on what the optimal values are. Better yet, an academic could do the work for them and publish a paper telling everyone what the optimal values are. Now what, are they supposed to be banned from engaging in research on what the optimal price is? [1] https://en.wikipedia.org/wiki/Black%E2%80%93Scholes_model https://en.wikipedia.org/wiki/Black%E2%80%93Scholes_model
- crazygringo 2y ago
  > 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. Yes, but it seems like that would miss the point of Realpage entirely. Which is that if all landlords pay for it and are pressured to follow its recommendations they all make a lot more money. Using algorithms to set your prices is fine. Using a shared algorithm to align your process is not. That's quite easy to outlaw. The "pressuring" part here is extremely clear.
  - gruez 2y ago
    >Yes, but it seems like that would miss the point of Realpage entirely. Which is that if all landlords pay for it and are pressured to follow its recommendations they all make a lot more money. This would entirely hinge on what you think "the point of Realpage" was. Some argue it's collusion as a service, but it's also plausible that they're offering pricing research.
    - crazygringo 2y ago
      > but it's also plausible that they're offering pricing research. It's not plausible when they strongly pressured landlords against accepting rents lower than suggested. That pressure wasn't an accident, and it wouldn't make any sense in a product that was merely pricing research. Now RealPage has been around for 26 years and didn't start out doing that. But at some point they transitioned into illegal price fixing as a service, because their pricing determinations were not treated as optional recommendations.
  - anticensor 2y ago
    Or, do the opposite, and force everyone to publish (not privately share!) their pricing strategy well ahead of time, but prohibit including competitors' prices or proxies thereof as decision variables. The most resilient strategy possible is the one that works even when everyone else knows and everyone else also publishes theirs but still engages in competition.
deleted 2y ago
[deleted]
blackeyeblitzar 2y ago
We need a total revision of the antitrust act to respond to all the ways in which mega corp distort the market and limit competition with it being a full monopoly.

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.
  - llamaimperative 2y ago
    That wasn't the commentator here, that was a quote from the opening (verbal) remarks. I.e. commentator + DOJ + you + I all know the distinction being drawn by the case, the AG just didn't dive into it in the first 3 sentences of his opening remarks on the case.
spencerflem 2y ago
The optimal rent for who? The point is that if Everyone has higher prices, because you can't not have a place to live people will be forced to pay more
- gruez 2y ago
  The market clearing price on supply-demand curve.
  - anticensor 2y ago
    No, the highest possible price that anyone would be willing to pay.
advael 2y ago
There's a huge difference between researching your competition and coordinating with them. In effect, Realpage is acting as a mechanism for landlords to coordinate prices collaboratively rather than competitively. It just hopes to get away with it by having them outsource the analysis part of this to a third party. It likely would have gotten caught sooner if it weren't for the nonsensical attitude regulators have taken toward software products, where using a computer to do something is treated as somehow different from simply doing it
- gruez 2y ago
  >There's a huge difference between researching your competition and coordinating with them If you read my comment carefully, you'd see that I was specifically talking about "independently derive the optimal price", not any sort of coordination.
  - advael 2y ago
    If you read my comment at all, you'd notice it leads with drawing a distinction between your hypothetical scenario and the actual case at hand. If you read my comment carefully, you might also notice that I'm being extra charitable by not pointing out that your hypothetical relies on oversimplifying how pricing signals operate in the real world. Of course you can make the problem seem to go away if you demand a simplification that elides all the details relevant to the problem.
    - gruez 2y ago
      >If you read my comment at all, you'd notice it leads with drawing a distinction between your hypothetical scenario and the actual case at hand. And that distinction was specifically acknowledged in my original comment. "Realpage goes beyond this by pressuring landlords to accept their recommended price, and that's probably what got them in hot water" >If you read my comment carefully, you might also notice that I'm being extra charitable by not pointing out that your hypothetical relies on oversimplifying how pricing signals operate in the real world. Of course you can make the problem seem to go away if you demand a simplification that elides all the details relevant to the problem. How does "how pricing signals operate in the real world" prevent my model from working? All you need is some sort of market research firm to provide key statistics like vacancy rate, disposable income, and average rent, and every landlord can arrive at approximately the same same rent.
JumpCrisscross 2y ago
> unclear how that can ever be outlawed though There are certain categories of information that you are legally prohibited from sharing with your competitors. How you will set prices in the future is one of them [1]. Whether competitors agree on a specific price or a system of pricing (e.g. X per square foot, or raise rent 1% every year except prime numbers when rent goes up 10%, or raise rent by the last number of the month's lottery number) is irrelevant. A landlord looking at RealPage's YieldStar price could be confident they wouldn't be undercut in the same way someone who's made a handshake deal with their competitors would. Where this crosses into liability for RealPage is if they knew this was how their tool was being used, or worse, marketed it as such. From what I've read, that seems to be the case. [1] https://www.justice.gov/archives/jm/antitrust-resource-manual-2-antitrust-division-field-offices https://www.justice.gov/archives/jm/antitrust-resource-manua...
- gruez 2y ago
  >There are certain categories of information that you are legally prohibited from sharing with your competitors. How you will set prices in the future is one of them [1]. Right, but if you read my comment more carefully, I was specifically talking about the case where everyone derives the optimal price independently. Nowhere is sharing the price with your competitor mentioned.
  - JumpCrisscross 2y ago
    > I was specifically talking about the case where everyone derives the optimal price independently If you're using the same model you know your competitors use it isn't an independent derivation.
    - gruez 2y ago
      What if there's only one plausible model rent valuation, or there's multiple plausible models that spit out basically the same number? For instance, options are widely priced using the black-scholes model, because that's basically the state of the art. Is everyone using that model engaging in price collusion as well? Sure, there might be a bunch of parameters that are adjustable that each landlord has to come up with themselves, but with access to enough data each landlord crunch the numbers and converge on what the optimal values are. Better yet, an academic could do the work for them and publish a paper telling everyone what the optimal values are. Now what, are they supposed to be banned from engaging in research on what the optimal price is? [1] https://en.wikipedia.org/wiki/Black%E2%80%93Scholes_model https://en.wikipedia.org/wiki/Black%E2%80%93Scholes_model
crazygringo 2y ago
> 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. Yes, but it seems like that would miss the point of Realpage entirely. Which is that if all landlords pay for it and are pressured to follow its recommendations they all make a lot more money. Using algorithms to set your prices is fine. Using a shared algorithm to align your process is not. That's quite easy to outlaw. The "pressuring" part here is extremely clear.
- gruez 2y ago
  >Yes, but it seems like that would miss the point of Realpage entirely. Which is that if all landlords pay for it and are pressured to follow its recommendations they all make a lot more money. This would entirely hinge on what you think "the point of Realpage" was. Some argue it's collusion as a service, but it's also plausible that they're offering pricing research.
  - crazygringo 2y ago
    > but it's also plausible that they're offering pricing research. It's not plausible when they strongly pressured landlords against accepting rents lower than suggested. That pressure wasn't an accident, and it wouldn't make any sense in a product that was merely pricing research. Now RealPage has been around for 26 years and didn't start out doing that. But at some point they transitioned into illegal price fixing as a service, because their pricing determinations were not treated as optional recommendations.
- anticensor 2y ago
  Or, do the opposite, and force everyone to publish (not privately share!) their pricing strategy well ahead of time, but prohibit including competitors' prices or proxies thereof as decision variables. The most resilient strategy possible is the one that works even when everyone else knows and everyone else also publishes theirs but still engages in competition.

deleted 2y ago

[deleted]

blackeyeblitzar 2y ago

We need a total revision of the antitrust act to respond to all the ways in which mega corp distort the market and limit competition with it being a full monopoly.