The algorithm is not operating on public info, it is soliciting proprietary pricing and vacancy data that is not available to renters or regulators. That secretive information sharing is the basis of the whole scheme.
And the collusion doesn't stop with this information hoarding; the pricing recommendations are as profitable as they are precisely because many property owners in a market are enacting them with the knowledge that a known quantity of their peers have no intent to undercut. Sure, someone can renege on that, but collusion doesn't require that you have an airtight legal contract to bind all parties; after all, such contracts are inherently illegal!
> Sure, someone can renege on that, but collusion doesn't require that you have an airtight legal contract to bind all parties; after all, such contracts are inherently illegal!
Small nitpick, collusion in a general sense is not illegal, but a price-fixing contract/conspiracy would be a crime under the Sherman Antitrust Act.
> One advantage RealPage’s data warehouse had was its access to actual lease transactions — giving it the true rents paid, instead of simply those a landlord advertised, RealPage said.
The above quote is the most substantive description of info sharing I could find in the section "Who Uses the Software and How It Work" in the article you linked. Is the claim that the secretive info being shared is the actual rents tenants are paying? Are companies and people not normally allowed to share that?
Yes, actual rents of all units under management, specifics about what properties are vacant, when properties are available to go up for lease renewal or open market, and I imagine also detail on deferred maintenance, to aid in deciding when to renovate which units. Would not be surprised if they take demographic data too. The more you share with RealPage, the better the recommendations you receive, and the higher your unearned income.
And no, these are not routinely shared publicly. Landlords are allowed to open their books, but for-profit businesses generally do not do so without specific incentive, because it is more profitable to keep trade secrets. Even if they wanted to, how would they do so? I'm not aware of a nonprofit data hub for them to dump all of this for public consumption (and if I don't know, I'm confident random slumlords in Cincinnati also don't). Maybe RealPage can make a free and open one if they are so committed to just making good honest tools for well-informed market participants.
The publicly scrapable data is: advertisements to prospective new tenants for the buildings who have tenants that recently announced their intent to move (or were evicted). They frequently won't even have specific unit numbers attached to them. They only have to be accurate enough to solicit inquiries and not get the landlord sued, an extremely low bar, especially in a hot market (where RealPage reaps its profits). The data availability is night and day.
>Is the claim that the secretive info being shared is the actual rents tenants are paying? Are companies and people not normally allowed to share that?
Companies and people generally do not share this information publicly and most companies consider it extremely proprietary.
So yes, that what's these lawsuits are about. All these companies share this extremely sensitive data (Vacancy data, actual rent and length of rental contract) with RealPage, Realpage algorithms use it to price rent.
Another thing the could do with this information is, if one of their customers has to take a bunch of units off the market to refurbish/abate them, it can instantly increase all of the prices for their other customers because it knows the supply just changed.
I mean, tenants share this info all the time. I'm not aware of them doing it really systematically anywhere, but I doubt there would be objections if they did. Likewise, no one objects when employees share salary info, anonymously or otherwise, even though employees usually treat this as confidential info.
The point is that we should be clear about what exactly the issue is. "The sellers are telling each other the prices they accepted" is not the issue, because this is allowed and generally considered conducive to efficient markets (even if pricing info in that market has traditionally been treated as proprietary). There's at least three distinct additional features one could point to, and I'm not sure which (or the conjunction?) is supposed to be crucial:
(1) That sellers are exchanging pricing information among each other without also revealing that info to buyers.
(2) That the shared pricing information is unusually comprehensive.
(3) That sellers are tacitly coordinating through the algorithmically suggested prices.
As far as I can tell, the legal issue is #3, you are (I think) suggesting the important feature is #2, and my tentative opinion is that #1 is probably the most influential in distorting the market to shift surplus from buyers to sellers.
Number 3 is fueled by 2 and assisted by 1. However, forcing 1/2 to be public wouldn't fix the problem here as housing unlike other goods is not 100% competitive market since supply is generally well constrained.
Forcing prices to be public would of course not keep cartels from being effective. But I claim the most efficient market is where all prices are public and coordination is prohibited, per standard theory (which applies find when supply is fixed).
All I see is this: "A company representative said in an email that RealPage “uses aggregated market data from a variety of sources in a legally compliant manner.”"
The only non-public data are it's own customers. But if I'm a massive landlord with multiple units, I have the same advantage?
The whole idea of anti-monopoly laws is to prevent price fixing by market, and there are numerous (illegal) ways to do that: being a monopoly and using that position to set prices that are not representative of market value (both buying and selling. Iirc antitrust in the us started as a result of standard oil setting the price oil would be bought from suppliers).
Another illegal option is collusion. That is a group of competitors get together and set a price that they will all use, again independent of actual
Market value, just because the colluders have sufficient control of a market that when they set a price people have no choice but to pay it. This is super effective when the market it not fundamentally “free” like housing, gas, power, healthcare, etc.
What these companies are doing is providing a tool to launder the collusion between competitors in a market, by having every “competitor” in the market get an “algorithmic” price that is fundamentally tied to the “algorithmic” price they provide every other “competitor”.
If these landlords got together in a room and decided the prices as is happening here, it would be more or less immediately subjected to scrutiny. By doing the same thing via a third party and calling it an “algorithm” it is somehow not subject to the same restrictions.
By the time the lawsuit against standard oil had concluded, they had lost market share, because price fixing doesnt work in real life, as more than a few industrialists have had to learn the hard way. Rents and mortgages are too high, but you are looking in the wrong place thinking housing costs are high due to price fixing.
Yeah you're gonna need some pretty strong support to make a claim like that - and not just an anecdote from the internet. Do you have any new proof upending long solidified economics?
I would recommend going beyond Econ 101, as well as observing the real world and reams of empirical evidence. Housing is not a perfectly competitive market for widgets with an abundance of sellers where everyone has perfect information and there are no transaction costs. "(illegal behavior X) could never happen because markets" is freshman dorm at UChicago thinking
I submit that the long term issues we are having in the united states, are in fact the result of short term solutions. Also, standard oil controlled more like 90% of the market, so in that context they had lost more like 25% by the time the trial concluded.
I'm pretty pro-market, but Standard Oil used a lot of techniques to fix prices. Having a lot of refinery control and the ability to undercut anyone who didn't play ball with them (and thus kill the small independent) did happen. They didn't need a true monopoly, just enough power to tank any smaller company that tried to undercut them.
If you're interested in the subject, The Prize: The Epic Quest for Oil, Money, and Power by Daniel Yergin is a fascinating read.
Its a book on basic economic reasoning, price signals, competition, those things are covered from a principled basis, sorry if it doesnt ctrl+f to tell you how irrational the idea of price fixing is.
You make an interesting point. While the concept is never introduced in the book, the sum total of the information of the book is that price fixing doesn’t work.
How do I square that with the lesson that I learned from the Bible? While price fixing is not mentioned in it it is pretty clear that it says that price fixing works
Well, I wouldnt belittle you for getting your economic education, the bible, Qur'an and others have discussed some economic matters; though, it may be advisable to consult one of the best economic textbooks regarding economic matters.
You know, maybe some people arent cut out for economics, but, the spirit of rothbard compels me, economic education is for the masses so I will provide a quote from chapter 2, prices and cost subsection.
"While you may put whatever prices you wish on the goods and services you provide, those prices will become economic realities only if others are willing to pay them, and that depends not on whatever prices you have chosen, but on how much consumers want what you offer, and on what other producers charge for the same goods and services."
So, maybe the 6th edition could be better equipped for ctrl+f economists, with all the communist propaganda words indexed to subsections.
We both agree that price fixing does not need to be mentioned in a book for that book to be clearly obvious in its position on it, and also that any book that mentions anything tangential to price fixing can contain an immutable and unarguable truth about it that becomes apparent only to those with the intellectual capacity to glean its hidden meanings.
I’m not really sure why you would impugn my mind for economics but perhaps since “read a book” qualifies as an argument, I might recommend that you try out The Living Bible? It is written in a plain English for those that may struggle with the vocabulary of the King James Version. There is no shame in not being able to get the clear and obvious message here, but thankfully the Good Book has versions for every level of reader :)
Oh, my bad, I assumed you were trying to be belligerent on basic economics not containing this information. Id actually be happy to adopt just about any world religions economic regulation, as opposed to what we have today.
We’re not discussing religious economics writ large. We’re discussing your book’s position on price fixing and my much more popular book’s position on price fixing.
I look forward to hearing your thoughts after reading it!
From looking at these, one part that was not immediately clear, is that they are not specifically just RealPage or Yardi, and rather a long list of property defendants on each case who used the software.
Kramer v RealPage (DC) actually has: REALPAGE, INC.; ALLIED ORION GROUP, LLC; AVALONBAY COMMUNITIES, INC.; AVENUE5 RESIDENTIAL, LLC; BELL PARTNERS, INC.; BOZZUTO MANAGEMENT COMPANY; CAMDEN PROPERTY TRUST; CUSHMAN & WAKEFIELD, INC.; EQUITY RESIDENTIAL; GREYSTAR REAL ESTATE PARTNERS, LLC; HIGHMARK RESIDENTIAL, LLC; and UDR, INC.
Thank you for the links though, they're very informative of what's actually moving through the court system.
"Can you decribe what secret info is being shared in those cases? Is it just the rents people are paying?"
According to the complaints, it is more than only the rents paid.
Note that "secret" is not the adjective used to describe the data/info being exchanged bwteeen the defendants. The term used is "non-public".
To bring suit against RealPage, precise descriptions of the non-public data/info are not necessary. Examples of this data/info may be found later, during discovery. As such, the initial complaints do not contain specific examples of data/info, only general desciptions. Below are some excerpts showing how the data/info is described generally.
Cherry v RealPage (WD Washington)
4. ... rents charged for each unit and each floor plan, lease terms, amenities, move-in and move-out dates.
4. ... the rents recorded in signed new leases ...
Lai-Cheong v RealPage (ED Virginia)
3. ... real time lease transaction data, including prospect, renter, and property data ...
3. ... non-public information about pricing (including unpublished starting rents and renewal rent increases), inventory, occupancy rates, length of leases, units and unit types that are or will be coming available to rent, and other confidential information about each of the apartments they manage.
45. ... real time lease transaction data, including prospect, renter, and property data ...
46. ... non-public competitively sensitive information ... including about pricing (featuring unpublished starting rents and renewal rent increases), inventory, occupancy rates, length of lease, units and unit types that are or will be coming available to rent, and other confidential information about each of the apartments they manage.
Sillverman v RealPage (SD New York)
65. ... specific, non-public pricing information on important factors such as concessions that are given at the time of lease that are individually negotiated and not otherwise publicly available.
Schmidig v RealPage (ED California)
46. ... detailed real-time non-public information on a daily basis about pricing (including unpublished starting rents and renewal rent increases), inventory, occupancy rates, length of lease, units and unit types that are or will be coming available to rent, and other confidential information about each of the apartments they manage.
Duffy v Yardi Systems (WD Washgington)
123. ... detailed, competitively sensitive, and non-public information about current supply, production, and pricing plans regarding leasing.
Haynes v RealPage (ND Georgia)
5. ... nonpublic proprietary data, including their lease transactions, rent prices, and occupancy and inventory levels.
94. ... detailed, real-time, and non-public information concerning pricing, inventory, occupancy rates, as well as their units and unit types available, or that will soon be available for rent.
White v RealPage (Massachusetts)
3. ... non-public data from its client property managers regarding lease transactions, rent prices, occupancy levels, and virtually every other possible data point that drives rent.
47. ... nonpublic lease transaction data ...
Boelens v RealPage (WD Washington)
3. ... non-public data from its client property managers regarding lease transactions, rent prices, occupancy levels, and virtually every other possible data point that drives rent.
47. Figure 1, below, is a diagram from an eBook published by Defendant RealPage on its website.32 It demonstrates how RealPage aggregates the data (including nonpublic lease transaction data) which enables RealPage to coordinate pricing among its clients.
Armas v RealPage (ND California)
2. ... non-public data from its client property managers regarding lease transactions, rent prices, occupancy levels, and virtually every other possible data point relevant to rent prices.
55. ... nonpublic lease transaction data ...
Marchetti v RealPage (SD Florida)
45. ... detailed real-time non-public information on a daily basis about pricing (including unpublished starting rents and renewal rent increases), inventory, occupancy rates, length of lease, units and unit types that are or will be coming available to rent, and other confidential information about each of the apartments they manage.
Corradino v RealPage (SD Florida)
3. ... non-public data from its client property managers regarding lease transactions, rent prices, occupancy levels, and virtually every other possible data point that drives rent.
53. ... nonpublic lease transaction data ...
Parker v RealPage (SD Florida)
3. ... non-public data from its client property managers regarding lease transactions, rent prices, occupancy levels, and virtually every other possible data point that drives rent.
54. ... nonpublic lease transaction data ...
Kramer v RealPage (District of Columbia)
3. ... non-public data from its client property managers regarding lease transactions, rent prices, occupancy levels, and virtually every other possible data point that drives rent.
And the collusion doesn't stop with this information hoarding; the pricing recommendations are as profitable as they are precisely because many property owners in a market are enacting them with the knowledge that a known quantity of their peers have no intent to undercut. Sure, someone can renege on that, but collusion doesn't require that you have an airtight legal contract to bind all parties; after all, such contracts are inherently illegal!