Justice dept. requires RealPage end sharing competitively sensitive information
justice.gov
justice.gov
1. How is this any different than other sorts of transactions that occur on a recurring basis? For instance dog walking services or personal trainers? Such vendors are also presumably pricing their services based on what everyone else's pricing is, but any subsequent price changes aren't public.
2. Under current competition law, whether something is an "open market" is irrelevant to whether a given pricing strategy is illegal or not. Collusion doesn't magically become legal because it's done on the open market.
RealPage made it so that landlords were less competitive and more cooperative. Landlords would share proprietary information and then RealPage would help them all set prices collectively. It's just old fashioned price fixing with a SaaS and an algorithm.
So the difference is using pricing info to beat your competitors vs using pricing info to collude with your competitors.
The way competitors legally message each other to suggest a price increase is via the prices themselves.
E.g. an airline wants to raise the price of a ticket from New York to Los Angeles from $500 to $530 -- and they secretly want the other airlines to follow them and raise their prices too.
1) The airline submits the price increase to the global travel reservation system that all airlines can see. All the other airlines have computers constantly monitoring all the other airlines' ticket prices and can instantly adjust prices in response.
2) The airline that wants the price increase waits to see how the other airlines respond. Either (1) the competitor airlines keeps their lower prices to "take market share" -- or -- (2) they also raise their prices to match which "maintains status quo of market share" but all competitors get to take advantage of charging the higher price
3) If the other airlines don't match the higher price, the airline that "proposed" the higher price then rolls it back to $500. All this can happen within a few hours.
That's the way competitors "collude" to raise prices out in the open. The publicly visible prices are the messaging system. The loophole here is that the changing prices must be visible because the potential passengers buying the tickets need to see them too.
The above scenario has been studied by various papers and the government. The prices simultaneously act as both a "cost to buy" and as a "message to cooperate".
Legal "collusion" via price signals is easier in concentrated industries with few competitors (e.g. airlines). It's harder for fragmented markets or markets with hundreds-to-thousands of competitors. E.g. a barbershop wanting to raise the price of haircuts by $5 isn't going to get the hundred other barbershops to also raise their prices by $5.
Yea I mean. A simple watch of movie film "A bueaitful Mind" starring John Nash as math genius russel crowe. Crowe equilibrium or whatever it's called. That scene where the nerds were in the bar trying to get the girl. his friends said let the best man win and crowe said - no - only way to win is we collude. and then they won. Now imagine that -- but it's not russel crowe, it's united airlines.
I mean if you look at companies from that crowe equilibruim perspective and treat them as sophisticated and rational.. one would expect most everything to be rigged!
Companies making individual decisions about pricing is legal.
Companies asking an external source (e.g. a consulting company) to help with pricing is legal.
Companies sharing nonpublic data with their competitors and setting prices collectively as a group is illegal.
The entire reason for Realpage's existence is to facilitate #3.
Literally from the linked DoJ press release
> RealPage’s revenue management software has relied on nonpublic, competitively sensitive information shared by landlords to set rental prices. RealPage’s software has also included features designed to limit rental price decreases and otherwise align pricing among competitors.
I'm not sticking up for Realpage; I don't know enough about how it works.
And, if you want to deviate from that, without being kicked off RP and losing your substantial fee payments, you will do follow that rate (and they tell you that 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).
> Consistent with their agreement to impose rents generated by RealPage RM Software nearly all the time, Defendants agreed to limit overrides. For example, a RealPage LRO training document states: “Overrides should be few and far between.” Similarly, internal RealPage LRO training documents teach cartel members’ regional managers to beware of “Override Overload” or “rogue” leasing agents who too frequently override the LRO-generated pricing.
> An internal presentation created by Defendant Greystar explicitly acknowledges that RealPage RM Software users should each seek to accept at least 95% of the RealPage-generated prices, emphasizing that “Discipline [o]f using revenue management increases more consistent outcomes.”
> Former Greystar employees have similarly confirmed that negotiating rents other than those set by the RealPage RM Software was unacceptable.
> Even where Participating Landlords do not enable auto-accept, most landlords cannot, on their own, charge rents other than those generated by RealPage’s RM Software— landlords can only “propose an override.” The landlord must then provide a written business justification for why they wish to depart from the RealPage-generated rent.
Queues on the iPhone release day, for example - the price of the phone is not just the money you pay, but also all the time you spend waiting in line.
I.e. exactly what we should be doing with housing.
Other than that, spot on.
You've got what was at one point a broadly accessible necessity, various degrees of government subsidy and market intervention, a bunch of ancillary industries trying to get their place on the coattails enshrined in law, etc, etc. Then that feedback loop was let to run for a couple generations and you get the current shit.
And it can't easily or promptly be cut back because it's such a huge fraction of commerce (slavery was 12% gdp in its day for comparison) that so many people would take a haircut that you'd start a war if you tried to do anything decisive. But on some level you have to, because to quote Tucker Carlson. "there's more to a national economy than real-estate and high finance" (specifically selected to be inflammatory, not like he's anywhere near the only one saying this).
One big difference: - ~10% of Americans work in healthcare (i.e. big source of income) - ~66% of Americans own their homes (i.e. big asset want to protect) - there's societal stability reasons to encourage home ownership
But surely you can see how this agenda is not appealing to most Americans who have been on the wrong side of wealth inequality? Even if you double the size of the pie, how do you convince them that their proportional slice of it won't halve in the same period? Because that HAS been their experience so far in the past ~50 years.
We do need to build more, but that has to also come with reform to be politically viable.
If the supply of something you need doubles, but your buying power halves, you are not necessarily better off. This is a straightforward argument.
People with normal mental health agree that having enough homes for all the people is a precondition of considering the housing problem to be "solved".
I agree with pretty much everything you've said on this thread, which makes it all the more important to me it be expressed persuasively and not angrily. Remember: you're not just writing to the person you're responding to, but also to everybody else who reads the thread. Trust readers to spot inane arguments, if you perceive them to be coming up!
I would assume users engaging in economic debate on HN would have a knowledge of the basic economic facts and trends, and not dismiss them as "incoherent".
1. Pick a rental rate. This can be based on public data, nonpublic data, or totally made-up.
2. "Strongly encourage" your users/customers to use the rate you picked.
3. 90% of your users/customers agree (historically speaking), legal collusion achieved.
That's what got them whacked in the DOJ investigation/indictment though?
Can't use nonpublic data in their models. Can't look at active leases. Can't run surveys to collect data. Can't suggest pricing narrower than at the state level. Can't align pricing among different users. Can't have features that discourage decreasing prices.
> Not use models that determine geographic effects narrower than at a state level
They are forbidden from having different models for different cities?? This seems extreme to me. Any background on this?
https://www.propublica.org/article/yieldstar-rent-increase-r...
> For tenants, the system upends the practice of negotiating with apartment building staff. 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.
...
> Apartment managers can reject the software’s suggestions, but as many as 90% are adopted, according to former RealPage employees.
There are other ways to distort markets besides collusion, and maybe Realpage does one of them?
Do you have any citation that supports that? That seems an awfully narrow definition.
> While some landlords might achieve higher profits by setting lower prices than recommended by the algorithm, it appears RealPage takes extensive measures to prevent such behavior. As alleged in the DOJ complaint, RealPage pushes its software users to turn on the auto-accept setting so that price recommendations are automatically accepted. The complaint also alleges that the process of rejecting a price recommendation can be onerous. For instance, in order to reject a recommendation from AIRM software, users must provide a “business” reason for doing so, and they must do so separately for each floorplan in the building. When it is costly for software users to override algorithmic recommendations, supracompetitive prices—prices above what would occur under normal competition—can be sustained.
https://bidenwhitehouse.archives.gov/cea/written-materials/2...
And the full complaint: https://www.justice.gov/archives/opa/media/1364976/dl