Company that makes rent-setting software for landlords sued for collusion

RealPage worked with some of the nation’s largest landlords to raise rents, says lawsuit.

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[marsilies]

Not saying they didnt do this, but this kind of comparison software could also be used to undercut your competitors. Just having the software wont be enough proof for court. It will have to be shown that they did use it to cartel and not compete.

My understanding is that the service doesn't actually offer "price comparison," but instead processes all that data behind-the-scenes and just offers the user a "recommended" price, which they "strongly urged" users not to deviate from.

Also, this bit of grossness from the original article:
https://www.propublica.org/article/yiel ... lpage-rent

Such agents sometimes hesitated to push rents higher. Roper said they were often peers of the people they were renting to. “We said there’s way too much empathy going on here,” he said. “This is one of the reasons we wanted to get pricing off-site.”

Their stance seems to be "why should landlords have empathy for their tenants? Just price gouge them as much as you can, and if they can't afford it anymore, kick them out and get another tenant."

 

[marsilies]

What I was suggesting was that if an algorithm is telling landlords to up their rent to $1200/mo, why not just have everyone up it to $1500? Or $2000?

Or is the algorithm essentially including estimates of rates in which tenants will fail to be able to pay and have to get evicted (which has costs to the landlords)?

You're making it too complicated. The maximum revenue a landlord can extract from their properties is average rent * total occupied residences. The algorithm figures the optimal revenue based on these. So while it will allow for additional vacancies if the overall revenue goes up due to the rent increase, it's not going to raise the rent to the point where the landlord's overall revenue goes down. So there's limits on how high and how fast it's going to raise rent in an area.

 

[marsilies]

To me that feels like somethign that would be high value to landlords with small numbers of units though. Once you are one of the big dog with hundreds or thousands of units in the area (which my impression is largely the companies using the data), it feels like your own data likely gets you 90-95% of the way there anyways.

So does it suddenly become OK if RealPage pivots to only using a particular landlord's data for that landlord? Then it is largely the same rent-setting without it looking like collusion.

There's always a benefit to collusion, otherwise companies wouldn't keep trying it and/or looking for loopholes like letting an algorithm do the collusion.

But yes, on a legal level, if the Realpage algorithm was looking at solely one particular landlord's private data (along with public data for all the other rental properties) to form recommendations for that landlord, then it wouldn't be collusion. If one landlord is so large as to be able to drive the market on their own though, then there's other monopoly/anti-trust laws that should come into play.

The idea of competition is that if there's meaningful competition, then any one company can't unreasonably raise prices, as people will switch to using the competitor. If competition becomes basically non-existent, either through collusion or just one company basically becoming a monopoly, then something is wrong and needs to be fixed.