[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.

[Geisterde]

Why would you compare landlords to OPEC? One organization has the backing of several militaries, including ours, defending their market position by threat of war. If you try to sidestep them you could end up like iraq.

Price fixing in the market doesnt work, because rival landlords cant call the government to airstrike their competitors when they get undercut.

[tsimionescu]

As long as demand exists for the product, cartel members make more money than regular market actors. Defectors can make even more money, but that behavior is going to either be irrelevant (if the defector is too small to Mather), or it will be punished - not by armies, but by other coercive measures. Bribing to return, denying access to other services, bad mouthing, even vandalism or illegal violence. The advantage of the cartel is too large to be allowed to dissolve.

And again, we don't have to guess. Cartels need to be broken up from the outside, they just don't dissolve naturally. This is basic economics, and a well understood weakness of markets. The idea that monopolies and cartels are too weak to resist in a market is not born out by either economic theory nor history.

[chii]

> If you try to sidestep them you could end up like iraq.

iraq invasion has nothing to do with opec. And no opec country has made military moves to enforce the cartel.

And in fact, a lot of opec countries tries to skirt the quotas for personal gain!

[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.