Hacker News Reader

> 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.

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 is actual coordination

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.

I assume this broadly falls into the category of "tacit collusion"[0].

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]

[0] https://en.wikipedia.org/wiki/Tacit_collusion

This case isn’t going to be decided on “is using the same algorithm collusion”. It’s going to be the fact that you are contractually bound to use RealPage’s rent number or face expulsion. There is a bunch of law dating back more than 100 years about exactly that type of trust.

Oh wow, you're absolutely right. Somehow I missed that from the OP:

> 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.

I don’t think they mean in a legal sense. That’s undecided, you’re right.

In a common sense, dictionary usage of the phrase, it is absolutely coordination.

I also mean in a legal sense. And yes the dictionary meaning too.

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.

Price fixing is problematic only because it allows producers to collude and force above-market price and restrict supply. That is problematic in markets with elastic supply, where price competition could change supply of individual market participants, but not in inelastic/fixed-supply market like rental market.

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.

> 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.

> 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 is what i address in the second paragraph: if vacancy rate is higher than would be expected, then one could argue price discovery algorithms caused price fixing of above-market rate.

It is still problematic for the same reasons, they just don't have to handle fixing the supply as well.

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.

Um what?

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.

I am asserting that in conversation about market collusion it is relevant whether such implicit coordination leads to different price level that would be without such coordination.

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.

Very similar case against Las Vegas hotels for using software to raise room rates

“ 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...

This explains why they merged the Realpage suits then and also initiated a similar suit at the State/Territory level.

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

Which was dismissed recently, although the judge allowed it to be refiled, if some additional details are included.

https://www.google.com/amp/s/www.reviewjournal.com/business/...

One potentially critical line from the article:

> 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.

It will be interesting to see how this argued. I personally am not sure such a complex evaluation of the algorithm is needed. If everyone agrees to tell Frank what they charge with the understanding Frank will use this data to tell you what to charge, that’s collusion.

... and each of you have a contractual agreement with Frank that you will charge what Frank tells you to at least 80% of the time ...

... and each of you knows that each of you has this same contract ...

There is no 80% contractual obligation. They just say them more you accept their suggested price the more effective it is.

“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.

“And we will enforce that by secret shopping you and dropping you from the service if you do not”.

That's not in the lawsuit, so I don't think it is a valuable addition to the conversation. If it was even implied lawyers would be eager to include it.

This is a 'complaint'. There is zero requirement to include all evidence that they intend to reference in court.

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).

You don't need to evaluate the algorithm.

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.

What if the algorithm turns out to be tuned in such a way as to essentially never reduce prices? That is, the algorithm is deliberately crafted in such a way so as to always favor the renters vs the rentees, could that weigh into the argument at all?

Idk.

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.

I think that is a good question. I am not 100% but I do think you could take the algorithm to extremes and it does matter.

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.

but algorithm B requires that the cohort you joined be big enough to have a material effect on the market price of said goods/services.

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?

Do you have to be successful in price fixing for it to be illegal or is just trying to price fix enough? That is a serious question - I do not know.

These two bullet points from the article seem to indicate that RealPage covers a large swath of the market, and that compliance is mandatory.

>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.

In my mind, you can't claim collusion because everyone is using the same algorithm.

But you can claim collusion because the parties are sharing information with and broadly following the recommendations of a single company.

> 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.

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

TradeDesk has algos that set bids (supply side), rather than set prices (sell side). Maybe SSPs have algos for setting floor prices that would be affected.

(Buy side)* for ttd

> 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.

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."