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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

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.
- adamsb6 2y ago
  In other contexts there’s no problem with using proprietary data to set prices, so long as you don’t run afoul of insider trading regulations. Landlords also don’t have monopoly pricing power, they’re making tradeoffs. They can’t list their unit for a million per month or else it would never sell. They can’t list it for a dollar because they would lose money and be flooded with applicants. They’re trading between the highest price they can charge and the unit sitting vacant. AFAIK this is the value RealPage adds, it predicts what the optimal price would be. If it were instead doing something like predicting the market price is X, but telling landlords to set it at 1.3X and stick to their guns while units sit vacant and that eventually renters would have to give in, then it would be a price fixing scheme. Discovering the market price is not a price fixing scheme. Otherwise the NYSE is a price fixing scheme, far more than RealPage.
  - hughesjj 2y ago
    > In other contexts there’s no problem with using proprietary data to set prices, so long as you don’t run afoul of insider trading regulations. I believe the parent comment mentioned proprietary data for accuracy, since you had only mentioned publicly available data. Parent comment then goes on to describe various ways Realpage does violate monopoly power.
- SoftTalker 2y ago
  They also (as I understand it) have landlords sign an agreement that they will charge RealPage's suggested rent and not undercut it. This is the collusion part. It's not just a market research service, they are manipulating prices.
- adamsb6 2y ago
  Reading through the details on the lawsuit now: https://www.documentcloud.org/documents/25060739-us_et_al_v_realpage_inc_-_1_-_complaint_filed?responsive=1&title=1 https://www.documentcloud.org/documents/25060739-us_et_al_v_... It is alleged that they use proprietary data, and it looks like they definitely do. RealPage doesn't appear to police landlord's price setting decisions. I see how you could get this from the first paragraph here, but the paragraph immediately after dispels it: > 28. In addition to agreeing to share nonpublic, competitively sensitive data with RealPage, each AIRM and YieldStar licensee agrees with RealPage to use the AIRM or YieldStar pricing software as RealPage designed it. Landlords are expected to review daily AIRM or YieldStar floor plan price recommendations and use the programs to set scheduled floor plan rents or even unit-level prices > 29. While landlords may not accept every price recommendation, they use AIRM or YieldStar as their pricing software, regularly review AIRM or YieldStar floor plan recommendations, use AIRM or YieldStar to set a scheduled floor plan rent, and use AIRM or YieldStar to set unit-level prices. I think "expected to review... use the program to set rents" must be a description of how the software is designed, not some reward or penalty scheme for setting recommended prices. There's a whole section starting on page 54 that details how RealPage encourages landlords to converge on price, and there's no enforcement mechanism mentioned. The law also does not prohibit a company from dominating a market. It prohibits using monopoly power to engage in certain practices. And monopoly position isn't an input to the price fixing function: it would be illegal even if between two self-employed plumbers.
hyeonwho4 2y ago
It seems to me like there are two significant factors in this case which likely cross the line: using private information from competitors (inventory, actual current prices) and clients being penalized for not sticking to the recommended prices. The latter (enforcement of cartel pricing decisions) makes the former more effective, and seem particularly egregious.
- adamsb6 2y ago
  I would agree that having a price enforcement mechanism crosses the line, but I can’t find evidence that they do.
duped 2y ago
I think you're missing that in order for your employee to do that work they would have to access public information, which is also available to renters. If on the other hand, you got an employee to call up landlords and get the rental pricing for every one of their units in exchange for the rent of all your units, and then agreed to set your pricing together - that's textbook price fixing. There's nothing illegal about collating publicly available information and selling it to others as a service. There is something illegal about collating private information and using it to advise many competing businesses what their prices should be.
ganoushoreilly 2y ago
I think the issue is with RealPage, they all use it's algorithm for automatic pricing adjustment. It's not the hiring of a company, it's the collusion of the company to artificially inflate and manipulate pricing across multiple locations, under the auspice of "increasing rents and owners value". You absolutely can "share cost" publicly, but colluding on pricing is where it get's questionable. The platform itself by itself to analyze pricing isn't a problem, where I think the problem arises is when the contract for you to use the platform tie you and your properties pricing to the platforms suggestion. Thus making the platform the deciding factor. It's dicey and will be an interesting read. Rentals are an interesting industry as is, many will sit 80% full rather than 100% because of platforms like this that can squeeze more out of them. I've rented from apartments that use this platform and it's wild. Every renewal was either same or cheaper rent for moving across the hall vs staying for a 20% increase in the same apartment. It's designed to squeeze and put pressure on you. Shady.
bell-cot 2y ago
From an "outside the black box" PoV of the rental market, there is very little difference between: (1) 95% (say) of landlords secretly meet somewhere, conspire, then set their new rent rates together (2) 95% of landlords secretly meet somewhere, conspire, then all set their new rent rates based on the "individualized" advice of Rent, Loot, & Pillage Consulting Co. (3) 95% of landlords listen to marketing pitches from RealPage, understand the between-the-lines message that using RealPage's software would be a great "all the added profits, but none of the legal exposure" alternative to a price-fixing conspiracy, and decide to buy & use the software.
singron 2y ago
I recommend reading the filing since the DOJ isn't saying this. The main differences is that RealPage collects and digests nonpublic information among competitors. The DOJ also has a lot of evidence that RealPage knew that this would increase prices and prevent competition. RealPage itself is also a monopoly. There are strong network effects with the service, and RealPage's willingness to allegedly anticompetitively raise prices means a another more scrupulous competitor is unlikely to succeed.
mint2 2y ago
after at least a year of regular posts on real page, where all the articles I’ve seen here specifically cite how real page enforces their pricing, why are there always posts that lead off with an entirely incorrect understanding of what real page does? Anytime a real page article is posted, a bunch of people come out expressing confusion and defend real page, asking why it’s illegal to look up competitor pricing… Then they express surprise when told that real page does more than that - that it actually sets the prices and makes the price onerous to change and applies penalties if landlords still does change the price. But this info is always stated in the articles, so what how or where are the posters getting their initial incorrect info on real page? It seems they must be getting bad info somewhere because it doesn’t seem plausible to guess at how real page works without even reading anything. And all of the incorrect understandings are always generous to real page.. is real page putting out a lot of fud somewhere that’s getting to people who then come here after being misled?

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.

adamsb6 2y ago
In other contexts there’s no problem with using proprietary data to set prices, so long as you don’t run afoul of insider trading regulations. Landlords also don’t have monopoly pricing power, they’re making tradeoffs. They can’t list their unit for a million per month or else it would never sell. They can’t list it for a dollar because they would lose money and be flooded with applicants. They’re trading between the highest price they can charge and the unit sitting vacant. AFAIK this is the value RealPage adds, it predicts what the optimal price would be. If it were instead doing something like predicting the market price is X, but telling landlords to set it at 1.3X and stick to their guns while units sit vacant and that eventually renters would have to give in, then it would be a price fixing scheme. Discovering the market price is not a price fixing scheme. Otherwise the NYSE is a price fixing scheme, far more than RealPage.
- hughesjj 2y ago
  > In other contexts there’s no problem with using proprietary data to set prices, so long as you don’t run afoul of insider trading regulations. I believe the parent comment mentioned proprietary data for accuracy, since you had only mentioned publicly available data. Parent comment then goes on to describe various ways Realpage does violate monopoly power.
SoftTalker 2y ago
They also (as I understand it) have landlords sign an agreement that they will charge RealPage's suggested rent and not undercut it. This is the collusion part. It's not just a market research service, they are manipulating prices.
adamsb6 2y ago
Reading through the details on the lawsuit now: https://www.documentcloud.org/documents/25060739-us_et_al_v_realpage_inc_-_1_-_complaint_filed?responsive=1&title=1 https://www.documentcloud.org/documents/25060739-us_et_al_v_... It is alleged that they use proprietary data, and it looks like they definitely do. RealPage doesn't appear to police landlord's price setting decisions. I see how you could get this from the first paragraph here, but the paragraph immediately after dispels it: > 28. In addition to agreeing to share nonpublic, competitively sensitive data with RealPage, each AIRM and YieldStar licensee agrees with RealPage to use the AIRM or YieldStar pricing software as RealPage designed it. Landlords are expected to review daily AIRM or YieldStar floor plan price recommendations and use the programs to set scheduled floor plan rents or even unit-level prices > 29. While landlords may not accept every price recommendation, they use AIRM or YieldStar as their pricing software, regularly review AIRM or YieldStar floor plan recommendations, use AIRM or YieldStar to set a scheduled floor plan rent, and use AIRM or YieldStar to set unit-level prices. I think "expected to review... use the program to set rents" must be a description of how the software is designed, not some reward or penalty scheme for setting recommended prices. There's a whole section starting on page 54 that details how RealPage encourages landlords to converge on price, and there's no enforcement mechanism mentioned. The law also does not prohibit a company from dominating a market. It prohibits using monopoly power to engage in certain practices. And monopoly position isn't an input to the price fixing function: it would be illegal even if between two self-employed plumbers.

hyeonwho4 2y ago

It seems to me like there are two significant factors in this case which likely cross the line: using private information from competitors (inventory, actual current prices) and clients being penalized for not sticking to the recommended prices. The latter (enforcement of cartel pricing decisions) makes the former more effective, and seem particularly egregious.

adamsb6 2y ago
I would agree that having a price enforcement mechanism crosses the line, but I can’t find evidence that they do.

duped 2y ago

I think you're missing that in order for your employee to do that work they would have to access public information, which is also available to renters. If on the other hand, you got an employee to call up landlords and get the rental pricing for every one of their units in exchange for the rent of all your units, and then agreed to set your pricing together - that's textbook price fixing. There's nothing illegal about collating publicly available information and selling it to others as a service. There is something illegal about collating private information and using it to advise many competing businesses what their prices should be.

ganoushoreilly 2y ago

I think the issue is with RealPage, they all use it's algorithm for automatic pricing adjustment. It's not the hiring of a company, it's the collusion of the company to artificially inflate and manipulate pricing across multiple locations, under the auspice of "increasing rents and owners value". You absolutely can "share cost" publicly, but colluding on pricing is where it get's questionable. The platform itself by itself to analyze pricing isn't a problem, where I think the problem arises is when the contract for you to use the platform tie you and your properties pricing to the platforms suggestion. Thus making the platform the deciding factor. It's dicey and will be an interesting read. Rentals are an interesting industry as is, many will sit 80% full rather than 100% because of platforms like this that can squeeze more out of them. I've rented from apartments that use this platform and it's wild. Every renewal was either same or cheaper rent for moving across the hall vs staying for a 20% increase in the same apartment. It's designed to squeeze and put pressure on you. Shady.

bell-cot 2y ago

From an "outside the black box" PoV of the rental market, there is very little difference between: (1) 95% (say) of landlords secretly meet somewhere, conspire, then set their new rent rates together (2) 95% of landlords secretly meet somewhere, conspire, then all set their new rent rates based on the "individualized" advice of Rent, Loot, & Pillage Consulting Co. (3) 95% of landlords listen to marketing pitches from RealPage, understand the between-the-lines message that using RealPage's software would be a great "all the added profits, but none of the legal exposure" alternative to a price-fixing conspiracy, and decide to buy & use the software.

singron 2y ago

I recommend reading the filing since the DOJ isn't saying this. The main differences is that RealPage collects and digests nonpublic information among competitors. The DOJ also has a lot of evidence that RealPage knew that this would increase prices and prevent competition. RealPage itself is also a monopoly. There are strong network effects with the service, and RealPage's willingness to allegedly anticompetitively raise prices means a another more scrupulous competitor is unlikely to succeed.

mint2 2y ago

after at least a year of regular posts on real page, where all the articles I’ve seen here specifically cite how real page enforces their pricing, why are there always posts that lead off with an entirely incorrect understanding of what real page does? Anytime a real page article is posted, a bunch of people come out expressing confusion and defend real page, asking why it’s illegal to look up competitor pricing… Then they express surprise when told that real page does more than that - that it actually sets the prices and makes the price onerous to change and applies penalties if landlords still does change the price. But this info is always stated in the articles, so what how or where are the posters getting their initial incorrect info on real page? It seems they must be getting bad info somewhere because it doesn’t seem plausible to guess at how real page works without even reading anything. And all of the incorrect understandings are always generous to real page.. is real page putting out a lot of fud somewhere that’s getting to people who then come here after being misled?