[bcarroll22]

genuine question here, apologies if i missed it in the article, but what's RealPage's crime in this? how is using an algorithm to set prices on apartments more criminal than using an algorithm for anything else we use algorithms for?

i'm not saying it's not criminal, i just don't think i understand what american laws they're breaking by doing this.

[stackskipton]

They get data from all the subscribers, including non-public data like vacancy/rent agreement length/units being taken off the market for various reasons than use that data to determine prices for the subscribers. DoJ is investigating this as Price Fixing which is criminally illegal in United States.

[bcarroll22]

got it, thanks.

so based on this context and some other comments, it seems like the potential crime isn't so much that they use these sources to algorithmically suggest a price or contrived vacancy, it's that their agreement enforces that any of their subscribers has to use their suggestions on price and availability, thus making it likely price fixing. correct?

[notaustinpowers]

There's a few different aspects:

They're using non-publicly data provided by their friends/partners to set rental rates. This data includes lease length terms, de-marketing reasons, etc. They then use this data to set a price on a specific unit. If I used their software and was putting a unit up on the market, they would have the price they recommend. If I disagreed with that price, I wouldn't be able to change it. I had to submit an appeal to RealPage, they would review my appeal, and decide if the rental rate was correct or not. I, as the property owner/management company, have lost all ability to set rental rates myself to the complex I own or work for.

And due to their pricing being compared to their own units, or to their partners units, this amounts to price fixing.

[stackskipton]

Agreement is problematic as well as requirement that they get all this non public data.

If they scraped apartment complexes websites and got public facing pricing data available there, that would be one thing. It's the fact they get all this non public data is extremely problematic part.

[toyg]

What is legal with 40% of the market might well not be legal with 80-90% of the market. That's the entire point of antitrust laws. If 90% of a market is composed of companies that explicitly coordinate to fix prices, that's an antitrust violation in most developed countries, so I expect it will be in the US too.

[FireBeyond]

They are actively facilitating dozens of companies, who are meant to be competitors, into using the same process for deriving prices to ensure that all these companies have increased profits at the expense of the consumer, i.e. removing competition due to price fixing.

It'd be one thing (still not good, but less problematic) if it was merely informational. But you also have RP requiring 90-95% compliance with their prices (including mystery shopping), requiring landlords to get RP's "approval" to go against the recommendation ("you mess with everyone when you don't", which if you're actually competing in a free market, why would you care?), and even up to and including advising their customer's execs of "problematic" property managers (those who are not complying).

[helios_invictus]

I believe the term of art would be "cartel facilitator as a service".

[kstrauser]

"Slumlord as a Service. We're the other SaaS."

[burkaman]

Using an algorithm is not what makes it criminal, facilitating large-scale collusion is what makes it criminal. Here is the FTC and DoJ's explanation of algorithmic price-fixing: https://www.ftc.gov/system/files/ftc_gov/pdf/YardiSOI-filed%...

Some quotes:

> concerted action can take many forms—including, inter alia, competitors’ jointly delegating key aspects of their decisionmaking to a common algorithm, because doing so “joins together separate decisionmakers” and thus “deprives the marketplace of independent centers of decisionmaking.”

> As technology has developed in the 133 years since the Sherman Act created a federal prohibition on price fixing, firms have evolved the mechanisms they use for reaching unlawful price-fixing agreements. In-person handshakes gave way to phone and fax, and later to email. Algorithms are the new frontier. And, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anticompetitive threat than the last.

> The question in this case is whether the defendants have violated Section 1 of the Sherman Act by allegedly knowingly combining their sensitive, nonpublic pricing and supply information in an algorithm that they rely upon in making pricing decisions, with the knowledge and expectation that other competitors will do the same. Although not every use of an algorithm to set price qualifies as a per se violation of Section 1, taking the allegations set forth in the complaints as true, the alleged scheme meets the legal criteria for per se unlawful price fixing.

(emphasis mine)

> To begin, the complaints allege that RealPage’s proposal “contemplated” and “invited” concerted action among the landlords. In fact, its “intent to create coordination among users,” including its “aim” of “increasing revenues by raising rents,” was “transparent to all.” Among other things, RealPage required each user to submit real-time pricing and supply data to it, and RealPage’s marketing materials allegedly “touted” its use of “non-public data from other RealPage clients,” enabling them to “raise rents in concert”; as well as the algorithms’ ability to “facilitate collaboration among operations” and “track your competition’s rent with precision.”

> Indeed, the complaints also contain ample allegations on how RealPage directly constrained the “deviations” from its suggested prices, including by enforcing and monitoring compliance with those prices, so the landlords effectively delegated aspects of their pricing decisions to RealPage.

> Indeed, RealPage allegedly touted this feature—stating in a press release that it gives clients “the ability to ‘outsource daily pricing and ongoing revenue oversight,’” such that RealPage could “set prices” as though it “own[ed]” the clients’ properties “ourselves.’”

You can think of RealPage's role as a facilitator that gathers competitors together and says "let me set all of your prices, if enough of you agree then you won't need to compete and we'll all make a lot of money together." That is illegal under antitrust law.

[prophesi]

I like the way Maureen K. Ohlhausen puts it:

> Let’s just change the terms of the hypothetical slightly to understand why. Everywhere the word “algorithm” appears, please just insert the words “a guy named Bob”. Is it ok for a guy named Bob to collect confidential price strategy information from all the participants in a market, and then tell everybody how they should price? If it isn’t ok for a guy named Bob to do it, then it probably isn’t ok for an algorithm to do it either.

Full talk from 2017: https://www.ftc.gov/system/files/documents/public_statements...

[toyg]

"But, but, The Wire told me that The Coop is the way to go! They all made money without dropping bodies!"

/s