[slrainka]

The key distinction lies in how YieldStar approaches setting rental prices compared to other systems. YieldStar not only recommends rental prices by analyzing the entire inventory it oversees but also incorporates a strategy that effectively eliminates the possibility of rent negotiation with potential tenants. This approach mirrors the dynamics of the prisoner’s dilemma, a situation in game theory where individuals may not cooperate, even if it’s in their best interest to do so. However, YieldStar transcends the Nash equilibrium—the point at which no participant can benefit by changing strategies if the others remain unchanged—by stripping tenants of any bargaining power. This ensures that the rent pricing strategy is firmly controlled, without the usual back-and-forth negotiation process.

[samatman]

This is a strange claim. How is it that software can eliminate the possibility of rent negotiation? A tenant can negotiate, or try to. How does software eliminate the possibility that this will succeed?

[cogman10]

It's the scope and breadth of deployment and the algorithm/business pressures.

> RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.

This is the key to why it's price fixing. Everyone playing ball and means that the raising rent rates increases everyone's take home even if a few operate with lower occupancy.

The software calculates rent rates that make sure occupancy isn't too low to keep everyone in line. It removes bargaining with the promise that "if you play ball, you'll be rich".

Tenants can negotiate prices just like you can theoretically haggle with amazon.

[tsimionescu]

The haggling part is not that relevant to whether this is price fixing or not.

If RealPage had the effect that all advertised rents in some area were 1000$ but 90% of renters actually negotiated that down to 800$, it would still be price fixing.

Conversely, if landlords in some area all independently decide not to budge from advertised prices and as a result occupancy rates are 10%, that would not be illegal price fixing. Most markets for consumers don't allow any kind of price negotiation, and yet they are not guilty of price fixing.

The key problem is that RealPage facilitates and even encourages explicit collusion between competitors, by showing the same non-public price recommendations to competing lamdlords. Whether that's successful or not and whether they try to make it contractually binding or not is ultimately irrelevant. As the FTC says, unsuccessfully trying to do price fixing is still illegal price fixing.

[Aunche]

> RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.

Of course they would discourage them from deviating from Realpage's recommendation. Why are you paying for a software that recommends the most profitable rent if you aren't going to follow it? Realpage doesn't want property managers to complain that the software isn't working when they're ignoring the software's recommendations.

I have yet to see any evidence that there are any actual consequences of ignoring the recommendations. I'm assuming that Realpage will always accept payment for their services. This suggests that price fixing is unlikely. In the case of a cartel, members are incentivized to sell more than their quota allows, and you need active enforcement to maintain compliance. See the history of OPEC.

[tsimionescu]

It doesn't matter if there are consequences for not following the illegal price fixing scheme (the recommendation algorithm). The fact that they are creating a price fixing scheme in the first place is illegal.

It's the same thing as if I were to call for a meeting of all landlords in my area to discuss rents. Anyone who owns property in the area is invited. At the meeting, I would propose that we all keep rents above 1000$ per room. People would argue and finally there'd be some broad agreement that 900-1100$ dollars per room is a better idea. We don't sign anything and don't imply any repercussions for those who ignore it. Then, 90% of those present would undercut the agreed numbers and offer their rooms for 800$. The end result is that rooms in the area go for 750-900$, so we utterly failed.

What everyone present at that meeting did, even those who undercut the agreed prices, is illegal price fixing. Competitors are simply not allowed to discuss and agree on prices in any way.

If we replace the meeting with a third party offering a recommendation algorithm that everyone independently follows, knowing that others do the same, nothing materially changes. The algorithm need not be binding, and need not be adopted fully, for this to be illegal to do.

[Geisterde]

I find the pernicious belief that prices could be fixed in the market itself more dangerous than the dumbest price fixing scheme of all time. Let it play out, so we can all remember that price fixing doesnt work, and we might actually see some good come from this story.

[tsimionescu]

Price fixing absolutely works for the parties fixing the price, assuming they have a dominant enough position, at least for some significant time. Look at OPEC - do you seriously believe they would be richer if they competed instead of agreeing on prices/supply?

Monopolies can extract massive wealth from a market, they perfectly optimize profit as long as they are not exceedingly incompetent. Price fixing is just a less organized monopoly.

The problem is that they do this at the cost of all other market participants. But markets can't correct for powerful enough monopolies or cartels. Only outside intervention (riots, government intervention, disruption of the whole sector) can dissolve a monopoly. There is no example in history of a monopoly losing its position in a market without this, since they can always just buy out incumbent competitors.

[FireBeyond]

Consequences involve being kicked off the service with no refund for the (significant) fees.

[Aunche]

Where does it say that? If it's something on the contract, you'd think that the FTC would open with that rather than vaguely imply this this happening.

[dkjaudyeqooe]

Because the software has set the price and the landlords are using the software's price exclusively. That is why it's price fixing.

[chii]

to me, it's not enough to show that the same algorithm or software is deciding the price.

It has to be that there's some threat of punishment from the cartel against those who would lower their price from the agreed one. For example, the explicit agreement by the landlord to keep the price at the algorithmicaly calculated one, even so far as to leave vacancy (where as there wouldn't have been a vacancy if the price was lowered).

[radicality]

There is. I forget the number, but the landlords are only allowed to disagree with the software (and give lower rent) only ~10% or so of the time. Otherwise they will be kicked off of the price fixing platform.

[samatman]

Why isn't that clearly stated in the FTC brief? That's a hell of an absence of evidence, under the circumstances. If there's a smoking gun, why leave it out?

[treis]

This sounds like denying the existence of price fixing altogether. Sure, buyers can try to negotiate against a price fixing scheme but it won't work. The price is fixed.

The software isn't really doing anything. It's simply the means of communication by which the prices are fixed amongst the suppliers.

[FireBeyond]

> The software isn't really doing anything. It's simply the means of communication by which the prices are fixed amongst the suppliers.

The software literally includes the algorithm that says "this week, you will set the rate for this apartment at $X" based on its data. And if you want to deviate from that, without being kicked off, and losing your substantial fee payment, you will do that rate (and they will check), or you can "request an override" from RealPage, that they may allow or deny at their discretion (and RP agents are formally trained that override approvals may not exceed 5% of requests).

[tsimionescu]

Even if they didn't kick you off, they would still be engaging in price fixing. They would be worse at actually changing prices with their scheme, but badly executed, ineffective price fixing is still illegal.

[lupire]

Can you link to info on that feature of the software?

[koliber]

It might not remove the possibility of negotiation. If it reduces the likelihood of negotiation, the impact is similar.

[dkjaudyeqooe]

The only way you can productively refuse negotiation is by knowing the price is fixed (or you have the only supply), otherwise others will take your business.

[jprete]

If it's widely believed that other landlords use the same pricing system as you, then that's exactly how landlords can refuse to negotiate.