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DOJ sues realpage for algorithmic pricing scheme that harms renters

justice.gov

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Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#271

Post by nightpool »

adamsb6 wrote: post #262

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 h…

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.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#272

Post by colechristensen »

kstrauser wrote: post #266
oconnore wrote: post #258

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?

Getting rid of the law of supply and demand is like getting rid of Boyle’s law. Legislate whatever you want but the behavior those laws model will still exist. I prefer to think of it this way. I like my markets free as in GPL, not free as in BSD. That is, I want the market itself to be free with limitations on the participants that keep them from taking it for themselves.

Uh, you're reading the wrong thing about it. Fixing supply and demand means things like punishing vacancies with taxation, promoting construction with tax breaks, and removing the demand by severely limiting rent seeking real estate investors.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#273

Post by hyeonwho4 »

adamsb6 wrote: post #262

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 h…

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.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#275

Post by Korikaze »

throwaway13337 wrote: post #260

[flagged]

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.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#276

Post by theolivenbaum »

throwaway13337 wrote: post #260

[flagged]

Isn't that precisely what they were doing? Forcing landlords to follow the recommended prices?

"RealPage thus makes it hard for customers to override its recommendations, according to the lawsuits, allegedly even requiring a written justification and explicit approval from RealPage staff." From: https://www.theatlantic.com/ideas/archive/2024/08/ai-price-a...

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#277

Post by Forge36 »

throwaway13337 wrote: post #260

[flagged]

Legally it depends (I am not a lawyer)

The DOJ is likely to pursue this as collusion[1] which had legal precedent.

In this case: both parties intentional gathered to review prices together (through use of a third party).

Some bits from the article RealPage allowed landlords to "share confidential data" and "to suggest rents and term".

I don't know to what degree suggestions were made. If they were consistently suggesting increases: It's may be less similar to "looking at your competitor" and more "competitors agreeing to continuously notify each other of a price increase"

If it's also sharing occupancy statistics notification of an inelastic market could also be a contributing factor.

[1]: https://www.justice.gov/opa/pr/assistant-attorney-general-jo...

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#278

Post by tantalor »

pstuart wrote: post #264
oconnore wrote: post #258

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?

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-...

You can't just ban them. Where there is profit to be made, they will find a way around any regulation.

You have to change the structure of the market so they no longer see these investments as profitable.

One way local areas do this is by "homestead tax exemption" which reduces property taxes if you live in your own home, but this is binary and punishes small landlords equally as big ones.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#279

Post by NegativeLatency »

oconnore wrote: post #258

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?

On the supply side Strong Towns is pretty interesting: https://www.strongtowns.org/housing

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#280

Post by duped »

adamsb6 wrote: post #262

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 h…

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.

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