Big landlords are colluding to raise rents, D.C. lawsuit alleges
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There are a couple other lawsuits against Realpage with a similar premise as we speak at the United States District Court for the District of Columbia, United States District Court for the Middle District of Tennessee, and the United States District Court for the Southern District of California.
I think the federal district lawsuits were all merged and moved to United States District Court for the Middle District of Tennessee a couple days ago, so a number of state level litigations will be a good backup.
Essentially, it looks like there is a coordinated attempt to define algorithmic antitrust at the Supreme Court level. If the DC Superior Court and the Federal Court have a conflicting interpretation, this needs to be reconciled and seems like the type of case that would end up in the Supreme Court.
This has massive implications for AdTech, FinTech, and multiple other industries, probably way more impactful than the Google FTC suit.
Edit: My Interpretation from my comment below
If a subset of companies use the exact same algorithm for price discovery, is there a form of price-fixing? This is the key question being argued.
If the courts rule against Realpage, then any form of algorithmic price discovery en-masse could be found to be anti-competitive.
This might mean you can't use TheTradeDesk and Google Adsense en-masse for example. Basically, as of today, a lot of price discovery is now automated by a majority of companies using a handful of vendors for this.
Lawyers of HN (looking at your raynier) please hold me accountable for my explanation.
If a subset of companies use the exact same algorithm for price discovery, is there a form of price-fixing? This is the key question being argued.
If the courts rule against Realpage, then any form of algorithmic price discovery en-masse could be found to be anti-competitive.
This might mean you can't use TheTradeDesk and Google Adsense en-masse for example.
Basically, as of today, a lot of price discovery is now automated by a majority of companies using a handful of vendors for this.
To me at least, what the algorithm is doing doesn't actually matter.
What actually matters is whether a set of players using a singular algorithm can count as price fixing or not.
Like is that coordination or not? This is a fundamental question for the entire API industry, ML Industry, and any other industry dependent on algorithms.
Algorithm A - professionally_evaluated_price + inflation
Algorithm B - average_price_of_cohort_you_agreed_to_join + 0.01
The first algorithm is super simple and is conceivably how many landlords might do it anyway and is based on value of your goods. Everyone using it wouldn't raise prices or hurt consumers. The second algorithm is basically agreeing with a cohort that you will never undercut each other and slowly raise prices. This obviously hurts renters and raises prices.
So at that point, it's not the algorithm, but the cohort that's at fault of price fixing. So is there proof that you joined a cohort? Does using the same software count as joining a cohort?
>The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit.
> RealPage's software has set the rent at more than 30% of apartments in multifamily buildings in D.C. and 60% of units in large multifamily buildings, per the lawsuit. The percentages are even higher for the broader D.C. metro area.
But you can claim collusion because the parties are sharing information with and broadly following the recommendations of a single company.
... and each of you knows that each of you has this same contract ...
“To encourage adherence to its common scheme, RealPage explains that for its services to be most effective in increasing rents, lessors must accept the pricing at least 80% of the time,” according to the suit.
That being said, it absolutely is referenced:
> RealPage actively polices Defendants’ agreement to ensure compliance.
> This data includes the rents that Defendant Landlords actually charge, providing RealPage with a mechanism for assessing whether Landlords “cheat” on their agreement by deviating from the rent dictated by RealPage’s RM Software.
> Their agreement is reflected in existing documents, has been publicly acknowledged by cartel members, and is closely policed to ensure compliance.
> Deviations from the RealPage-generated rent are referred to as “overrides.” 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.
Sounds like it's very much in the lawsuit. I'm not sure how you come to any other conclusion. It's a core tenet across multiple pages of it. In your previous comment you try to imply it's just "encouraged". And now you're making statements that are demonstrably incorrect (and I found those examples with less than five minutes of skimming the court complaint, so it's hard to imagine how you missed them all).
“ The lawsuit was originally filed Jan. 26, 2023, seeking class-action damages from MGM Resorts International and Caesars Entertainment, along with Treasure Island and Wynn Resorts. It alleged that the resorts’ use of software from Georgia-based Rainmaker to set prices constituted price fixing, and that supply and demand was disregarded. Customers paid higher prices because Rainmaker’s algorithm created a market that wasn’t competitive, lawyers argued.”
https://www.8newsnow.com/news/local-news/judge-dismisses-law...
It has a very chance of giving conflicting advice on whether a group of organizations using a singular algorithm are committing a form of price fixing.
Yea this is probably a Supreme Court case in 2026, and one that will definitely end up in AP Gov textbooks in 2-3 decades
https://www.google.com/amp/s/www.reviewjournal.com/business/...
Maybe so but this is far worse than that.
This is actual coordination, like just literal price fixing. For example the software requires users to actively ask for an override if they deviate from the recommendation. It's pretty literally a "trust" in the old school sense, of some kind of organization that coordinates actors across a sector.
Price discovery is probably also already illegal, but there's at least one layer removed, in the sense that competitors are sharing price data with each other and using the same algorithmic tools but coming to their own conclusions.
My view is that also is and should be illegal, and I hope you're right that the whole approach will be under scrutiny right now.
But the rent one is even more clear cut, it's almost impossible to justify unless you're using motivated reasoning to pretend that it's somehow different if you do it in a SaaS platform instead of a conference call or in a smoke filled room.
This hasn't been decided yet.
If 10 companies uses ACME CO's proprietary funded algorithm for price discovery, are those 10 companies commiting price fixing or not?
They never explicitly chatted with each other to use ACME Co, yet they all profit from ACME Co's singular results.
Is this price fixing or not? We don't legally know yet.
Wikipedia had a blurb on algorithmic tacit collusion was previously noted:
>A few years ago, two companies were selling a textbook called The Making of a Fly. One of those sellers used an algorithm which essentially matched its rival’s price. That rival had an algorithm which always set a price 27% higher than the first. The result was that prices kept spiralling upwards, until finally someone noticed what was going on, and adjusted the price manually. By that time, the book was selling – or rather, not selling – for 23 million dollars a copy.
>The book "The Making of a Fly" by Peter Anthony Lawrence, written in 1992, briefly achieved a price of $23,698,655.93 on Amazon in 2011.[25] An OECD Competition Committee Roundtable "Algorithms and Collusion" took place in June 2017 in order to address the risk of possible anti-competitive behaviour by algorithms.[26]
In a common sense, dictionary usage of the phrase, it is absolutely coordination.
It’s just openly and obviously collusion.
Antitrust enforcement in this country has completely collapsed for a generation and the plain meaning of laws has been ignored a lot. It’s pretty clear that’s what they’ve been counting on here.
Might work we’ll see.
> The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit.
One could verify if this price discovery caused above-market price by comparing vacant rental rate. If it is higher than would be expected, then one could argue price discovery algorithms caused price fixing of above-market rate. If it is not, then it is just an efficient way to discover true market rate and there is no damage by using it.
The algorithms are optimizing price instead of vacancy. I don't think we can assume these are one and the same (price and vacancy) because there are ongoing cost differences between vacant and occupied property.
As an extremely unlikely scenario, what if the algorithm determines it's optimal to rent only 20% of your listings to scarcity whales at 4 times the price leaving 80% vacant due to maintenance costs and other factors? From a market perspective, that's absolutely fine, but from a society perspective it's pretty horrible.
which is where vacancy penalty should be imposed by the gov't to prevent this undesired behaviour - if the constituents vote for such measures of course.
That said, it would be naive to assume this conversation is disconnected from lobbying against housing supply programs and zoning that keeps supply of homes low as well.
Are you really asserting that suppliers should be able to set prices as high as possible for a fundamentally needed good despite the fact that floating the price has no effect on the underlying supply?
Just the epitome of “the market” being the end rather than the means.
If you have fixed supply, then price as high as possible as demand allows is equilibrium reached even without any coordination / collusion by suppliers, and it is just a question how fast market converges to such equilibrium.
Whether there should be social or political reasons for regulating rents is completely different conversation.
IANAL but this seems incorrect. Price discovery is one thing, being contractually obligated to keep prices at a certain level 80% of the time is another. A court can make a ruling about that 80% number in the contract without saying anything that impacts one's ability to discover the prices competitors charge
No it's not. You're missing a critical bit here. The argument is that there's actual enforcement of the price the software suggests, and at that point it really seems completely irrelevant whether the enforced price was determined by an algorithm or a person:
"The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit."
> Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit.
Makes this arguably much more over the line than just a bunch of landlords that happen to use the same pricing algorithm. Landlords being pressured to not use the algorithm however they want, say setting their price $100/month below the algorithm, under threat of losing access to the algorithm may be what ultimately loses this trial for them. If that is the case, we may not get to a ruling that resolves the legality of the more general practice of many people using the same pricing algorithm.
Edit: In business, I try to do something productive for others and earn a return on that. Our business culture seems to have taken our worst instincts and made them religion: Squeeze every drop of blood out of everyone. What is RealPage producing for our society?
This is how to achieve satisfaction with your work. Unless you’re sociopathic, knowing that your work takes advantage of others causes cognitive dissonance.
Devil's advocate: if you believe high density living is important/required to reduce society's environmental footprint, someone needs to build it, and someone needs to operate it. Helping people who operate high density residential charge more for it, makes it more desirable to operate, and therefore increases demand for construction of high density living spaces. Thus, helping society move towards higher density living and saving the environment.
If high density living reduces society's environmental footprint, then it's using less raw resources and drawing less power per person housed.
Helping people who operate high density residential charge more for it, per person, is literal price gouging and extracting unreasonable profit.
There should be a good return per high density housing project from the fact that there are more people overall, but the expectation, surely, should be that total cost per person housed is less and that profit per person is accordingly also reduced.
The market is always right. If people want high density, they will pay for high density.
A nice theoretical discussion, but clearly not true in reality. And even the theorists wouldn't agree.
> There were 49.5 million rental units in the U.S. as of 2022, according to data from the U.S. Department of Housing and Urban Development.
> RealPage in 2020 said its software served 19.7 million rental units of all types in the U.S. — more than a third of all rental units nationwide.
> RealPage's software has set the rent at more than 30% of apartments in multifamily buildings in D.C. and 60% of units in large multifamily buildings, per the lawsuit. The percentages are even higher for the broader D.C. metro area.
> The software company actively "polices" landlords to ensure that they comply with the rent cost it generates, the lawsuit alleges. Failure to impose the RealPage rents could lead to landlords being expelled from the organization, according to the suit.
And nationwide:
> There were 49.5 million rental units in the U.S. as of 2022, according to data from the U.S. Department of Housing and Urban Development.
> RealPage in 2020 said its software served 19.7 million rental units of all types in the U.S. — more than a third of all rental units nationwide.
I am assuming that landlords are "warehouse-ing" empty units, and then jacking up the price for the remaining units so high that it makes up for the existing vacancy. Basically, this algorithm is turning participating landlords into an effective monopoly. Super grey area, but I think that should be illegal.
That would explain why NYC remained persistently high even after pandemic.
Yes. I live in a building managed by one of the named defendants. I regularly check the available units page to see what is available (because I want to move into a bigger unit, but only specific ones).
I've seen some units on the page for a long time, then get taken off, then put back on again a few weeks later. My building explicitly does not do any short term rentals, including corporate (I don't know about military, but none of them are furnished, so I doubt it). Some units in particular I have tracked to be available for over a year, with practically only price increases. They (and all other available units) do drop by 10s of dollars/month on a somewhat cyclical basis, which seems like it coincides with availability boundaries so that apartments don't all become rented and available all at the same time.
Judgement here: https://www.justice.gov/atr/final-judgment-us-v-airline-tari...
This is the Billion Dollar Question about the Realpage suit, and why I kind of dislike Lina Khan.
She could have directly attacked this question which is much more fundamental, instead of the business incorporation question she described in her seminal Amazon paper.
Algorithmic price-fixing is a much more fundamental question than bigtech populism with extra steps.
It would also give the hammer needed to hold companies like Amazon or Google accountable if they were anticompetitive.