Worth mentioning this is not just "prices are too high" so much as a legit accusation of price fixing. The two are obviously related, but I'm glad to see (so long as the evidence is there) that...
Worth mentioning this is not just "prices are too high" so much as a legit accusation of price fixing.
The two are obviously related, but I'm glad to see (so long as the evidence is there) that there's actually some legal actions on this. Even most proponents of capitalism agree that monopolies and price fixing are awful for markets/consumers, and it's a huge issue that we've just let tech make them trivial and done nothing to enforce breaking them up.
Edit-
That said I really do wonder how the legal world is going to handle this.
If I sit down with the other 7 major landlords and say "so we all agree, no one charges rent lower than $100" that's very obviously not legal (despite not being enforced nearly as much as it should be across a wide range of industries).
If I have a 3rd party who I give all my data, and the other 7 do the same, and I see none of the other data, and they say "charge $100"....is that illegal? I feel it should be, but ignoring all tech and just abstracting it to this scenario, i'm curious as to what the legal system would say
Exactly. Setting penalties for defectors is a big red flag in this case. If it was a company that did market research and gave landlords recommendations for market rate rents, that would be fine....
Exactly. Setting penalties for defectors is a big red flag in this case.
If it was a company that did market research and gave landlords recommendations for market rate rents, that would be fine. Accurate data is key in getting an edge in competitive markets. Imposing penalties if landlords don't set rents the way you dictate is shaping the market, not reading the market. RealPage should be penalized now before this type of price fixing makes its way into other industries.
RealPage should face the corporate equivalent of capital punishment. The company should be dissolved and their entire executive team banned from working in any remotely related industry for the...
RealPage should be penalized
RealPage should face the corporate equivalent of capital punishment.
The company should be dissolved and their entire executive team banned from working in any remotely related industry for the rest of their lives.
I don't think this is extreme in the slightest. None of those executives will end up homeless, I'm sure they've all made plenty of money to retire early after they spend a few years in rich people prison.
Ahhhhh. How terribly depressing this was ever even allowed. I'd like to think it's just the legal system asleep at the wheel but I should probably look at their local political donations.
Ahhhhh. How terribly depressing this was ever even allowed. I'd like to think it's just the legal system asleep at the wheel but I should probably look at their local political donations.
It's a little different because the landlords don't actually get to see the data of other landlords or speak with other landlords. RealPage facilitates it in a way that obscures the price fixing...
It's a little different because the landlords don't actually get to see the data of other landlords or speak with other landlords. RealPage facilitates it in a way that obscures the price fixing from each landlord. It's definitely a new kind of price fixing case that will set a precedent for how technology can be used in many other industries.
This isn't really a technology problem, though. This same kind of thing could be happening if this was the 1800s and there was a business firm that was doing all of this.
This isn't really a technology problem, though. This same kind of thing could be happening if this was the 1800s and there was a business firm that was doing all of this.
Well, RealPage sets prices with an algorithm. RealPage executives can say that the software says what to do, so no humans are involved. It's a little more abstract than a conference room where men...
Well, RealPage sets prices with an algorithm. RealPage executives can say that the software says what to do, so no humans are involved. It's a little more abstract than a conference room where men in suits say what the median 1bd apartment price should be in Seattle this week.
RealPage collects rent market data and then has the algorithm set the price. The algorithm may be relatively innocent and just find the current market rent for similar units and then increase the price by X%. Many landlords do that already, but they manually collect rent prices by calling other landlords or checking rental sites. That is not an issue.
The issue is when you run into a situation where the majority of rental prices are set by that software. If the algorithm increases prices by X% on a single unit, it will take the rental price that it just set and plug it back into the algorithm when a landlord down the street is setting a rental price. The algorithm recalculates prices much quicker than a property manager checking zillow would, so prices can balloon.
In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage.
The problem isn't the algorithm, though; the problem is the act of coercing pricing. The algorithm could be a random number generator but it's the functional organization around it that would...
The problem isn't the algorithm, though; the problem is the act of coercing pricing. The algorithm could be a random number generator but it's the functional organization around it that would cause it to be a problem.
One key factor is that RealPage essentially requires landlords to rent at the rate they suggest. If you go against their guidelines enough, they will kick you off the platform. If the software...
One key factor is that RealPage essentially requires landlords to rent at the rate they suggest. If you go against their guidelines enough, they will kick you off the platform.
If the software only gave a recommended rate based on market conditions that would be more acceptable in my eyes, but when they penalize landlords from acting out of line with their guidelines, it looks more like price fixing.
Yes the second example is illegal. It's been prosecuted in my industry and executives have faced jail time. Hell we've had congressional hearings that my ceo had to testify at. There are standards...
Yes the second example is illegal. It's been prosecuted in my industry and executives have faced jail time. Hell we've had congressional hearings that my ceo had to testify at.
There are standards for that type of aggregate reporting to be considered "safe harbor." Generally
minimum number of participants and no one participant comprising an over sized proportion of the data.
lag time to reduce tactical value
it gets more precise. But there is precedent for fines/charges in that context.
Thanks for the data point. My gut was it had to be but it's the sort of thing I've only ever casually looked into and couldn't think of anything i'd read to indicate otherwise.
Thanks for the data point. My gut was it had to be but it's the sort of thing I've only ever casually looked into and couldn't think of anything i'd read to indicate otherwise.
US antitrust law - wikipedia Competition law - wikipedia US antitrust standards of review Here are a couple of links in case you or anyone wants to dive deeper.
What is it that makes it price fixing? Is it that the prices are being fixed, or is it the conspiracy to do so? If it's the former then they're definitely breaking the law. If it's the latter then...
What is it that makes it price fixing? Is it that the prices are being fixed, or is it the conspiracy to do so? If it's the former then they're definitely breaking the law. If it's the latter then they may be in the right but the law very clearly needs to be amended to cover this because it seems pretty clear that this is damaging to the economy no matter what commodity is being affected.
Landlords can be kicked off the platform is they don't set their rents the way RealPage instructs them to. The landlords don't talk with each other or decide what rents will be, but RealPage does...
Landlords can be kicked off the platform is they don't set their rents the way RealPage instructs them to. The landlords don't talk with each other or decide what rents will be, but RealPage does the price fixing for them. Once enough landlords in a market use RealPage, RealPage has the ability to dictate what "market rent" is for that area.
See also, this lengthy investigation from ProPublica about RealPage from earlier that year: https://tildes.net/~finance/16lm/us_rent_going_up_one_companys_algorithm_could_be_why
NPR's The Indicator from Planet Money covered this in an episode in January. This is a quick 9 minute listen for anyone who wants to hear more about this.
Worth mentioning this is not just "prices are too high" so much as a legit accusation of price fixing.
The two are obviously related, but I'm glad to see (so long as the evidence is there) that there's actually some legal actions on this. Even most proponents of capitalism agree that monopolies and price fixing are awful for markets/consumers, and it's a huge issue that we've just let tech make them trivial and done nothing to enforce breaking them up.
Edit-
That said I really do wonder how the legal world is going to handle this.
If I sit down with the other 7 major landlords and say "so we all agree, no one charges rent lower than $100" that's very obviously not legal (despite not being enforced nearly as much as it should be across a wide range of industries).
If I have a 3rd party who I give all my data, and the other 7 do the same, and I see none of the other data, and they say "charge $100"....is that illegal? I feel it should be, but ignoring all tech and just abstracting it to this scenario, i'm curious as to what the legal system would say
It's not just "charge $100". It's "I see you aren't charging at least $X. You will be suspended from the platform until you do."
Exactly. Setting penalties for defectors is a big red flag in this case.
If it was a company that did market research and gave landlords recommendations for market rate rents, that would be fine. Accurate data is key in getting an edge in competitive markets. Imposing penalties if landlords don't set rents the way you dictate is shaping the market, not reading the market. RealPage should be penalized now before this type of price fixing makes its way into other industries.
RealPage should face the corporate equivalent of capital punishment.
The company should be dissolved and their entire executive team banned from working in any remotely related industry for the rest of their lives.
I don't think this is extreme in the slightest. None of those executives will end up homeless, I'm sure they've all made plenty of money to retire early after they spend a few years in rich people prison.
Ahhhhh. How terribly depressing this was ever even allowed. I'd like to think it's just the legal system asleep at the wheel but I should probably look at their local political donations.
It's a little different because the landlords don't actually get to see the data of other landlords or speak with other landlords. RealPage facilitates it in a way that obscures the price fixing from each landlord. It's definitely a new kind of price fixing case that will set a precedent for how technology can be used in many other industries.
This isn't really a technology problem, though. This same kind of thing could be happening if this was the 1800s and there was a business firm that was doing all of this.
Well, RealPage sets prices with an algorithm. RealPage executives can say that the software says what to do, so no humans are involved. It's a little more abstract than a conference room where men in suits say what the median 1bd apartment price should be in Seattle this week.
RealPage collects rent market data and then has the algorithm set the price. The algorithm may be relatively innocent and just find the current market rent for similar units and then increase the price by X%. Many landlords do that already, but they manually collect rent prices by calling other landlords or checking rental sites. That is not an issue.
The issue is when you run into a situation where the majority of rental prices are set by that software. If the algorithm increases prices by X% on a single unit, it will take the rental price that it just set and plug it back into the algorithm when a landlord down the street is setting a rental price. The algorithm recalculates prices much quicker than a property manager checking zillow would, so prices can balloon.
The problem isn't the algorithm, though; the problem is the act of coercing pricing. The algorithm could be a random number generator but it's the functional organization around it that would cause it to be a problem.
One key factor is that RealPage essentially requires landlords to rent at the rate they suggest. If you go against their guidelines enough, they will kick you off the platform.
If the software only gave a recommended rate based on market conditions that would be more acceptable in my eyes, but when they penalize landlords from acting out of line with their guidelines, it looks more like price fixing.
Yes the second example is illegal. It's been prosecuted in my industry and executives have faced jail time. Hell we've had congressional hearings that my ceo had to testify at.
There are standards for that type of aggregate reporting to be considered "safe harbor." Generally
it gets more precise. But there is precedent for fines/charges in that context.
Thanks for the data point. My gut was it had to be but it's the sort of thing I've only ever casually looked into and couldn't think of anything i'd read to indicate otherwise.
US antitrust law - wikipedia
Competition law - wikipedia
US antitrust standards of review
Here are a couple of links in case you or anyone wants to dive deeper.
What is it that makes it price fixing? Is it that the prices are being fixed, or is it the conspiracy to do so? If it's the former then they're definitely breaking the law. If it's the latter then they may be in the right but the law very clearly needs to be amended to cover this because it seems pretty clear that this is damaging to the economy no matter what commodity is being affected.
Landlords can be kicked off the platform is they don't set their rents the way RealPage instructs them to. The landlords don't talk with each other or decide what rents will be, but RealPage does the price fixing for them. Once enough landlords in a market use RealPage, RealPage has the ability to dictate what "market rent" is for that area.
EDIT: This link has some very damning quotes by RealPage executives. https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent
Previous discussion about Real Page Inc here
See also, this lengthy investigation from ProPublica about RealPage from earlier that year:
https://tildes.net/~finance/16lm/us_rent_going_up_one_companys_algorithm_could_be_why
NPR's The Indicator from Planet Money covered this in an episode in January. This is a quick 9 minute listen for anyone who wants to hear more about this.