[HN Gopher] Big landlords are colluding to raise rents, D.C. law...
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Big landlords are colluding to raise rents, D.C. lawsuit alleges
Author : janandonly
Score : 74 points
Date : 2023-11-05 21:29 UTC (1 hours ago)
(HTM) web link (www.axios.com)
(TXT) w3m dump (www.axios.com)
| game_the0ry wrote:
| I am very interested to know how this works under the hood.
|
| 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.
| projektfu wrote:
| I don't think it requires warehousing. Any underpriced (non-
| cartel) units are going to be held onto by the current renter
| because the available market is too expensive to move. But the
| renters being forced to the market by rent increases aren't
| finding cheaper places so they're paying higher rents.
| Presumably any new construction is going to be in the cartel.
| klipt wrote:
| Yeah I think the idea is that without the algorithm, a landlord
| is more likely to game theoretically "defect" and advertise
| lower rent to fill a vacancy, but the algorithm discourages
| that in favor of cooperation/collusion.
| wolverine876 wrote:
| Does anyone here know or develop RealPage Revenue Management
| software and want to comment on it?
|
| 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?
| anon373839 wrote:
| > I try to do something productive for others and earn a return
| on that.
|
| This is how to achieve satisfaction with your work. Unless
| you're sociopathic, knowing that your work takes advantage of
| others causes cognitive dissonance.
| gonzo41 wrote:
| There's plenty of FB developers floating about here. That
| platform has had a pretty big impact on place like Myanmar.
| and everyone seems to just ignore that fact.
| 8jkdsa8h4ebjvxz wrote:
| sad world
| alephnerd wrote:
| This is smart that there is an attempt in the DC Superior Court
| as well.
|
| 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.
| danielfoster wrote:
| 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.
| alephnerd wrote:
| 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.
| fbdab103 wrote:
| 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?
| FireBeyond wrote:
| ... 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 ...
| tempsy wrote:
| 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...
| alephnerd wrote:
| 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
| CPLX wrote:
| > 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.
| alephnerd wrote:
| > 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.
| wolverine876 wrote:
| RealPage is an aggressive, powerful organization, the lawsuit
| alledges:
|
| > 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.
| sklargh wrote:
| This reminds me a lot of the Airline Tariff Publishing Company
| case in the 90s. Airlines used an industry marketplace to price
| fix and were successfully enjoined from doing so. I would not be
| surprised if in many industries similar behavior hides behind an
| algorithmic veneer.
|
| Judgement here: https://www.justice.gov/atr/final-judgment-us-v-
| airline-tari...
| alephnerd wrote:
| > would not be surprised if in many industries similar behavior
| hides behind an algorithmic veneer.
|
| 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 HHI with extra steps.
| local_crmdgeon wrote:
| Game theory makes this very unlikely, but we'll see if they have
| a strong case.
| CPLX wrote:
| What do you mean "makes this very unlikely" they're literally
| doing it, there's mountains of evidence that it's actually
| happening. They haven't really been trying to hide it the only
| real argument is if you somehow get a pass on a charge of
| colluding if a software platform is involved.
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