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.
> 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.
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]
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 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.
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.
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.”
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
> 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.
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.
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).
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?
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?
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.
> 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.
> 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."
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?
Anyone working there should keep themselves out of comment sections while they and/or their customers are embroiled in lawsuits, so I'd imagine you won't get a response from them.
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.
> 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.
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.
I mean it’s had an enormously negative effect on the planet in general. Democracy in the states is on the brink mostly because of Facebook and Twitter.
It’s just not DC. Boston and Metro west of Boston, Burlington, Waltham Framingham, Natick are flooded with properties owned by Greystar, Equity Residential and Avalon. The rents rise to the cents in sync. If there are a tort lawyers out there this is great opportunity if you put in some time. They are inflated atleast 100-150% of a reasonable market rate.
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.
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.
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.
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.
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.
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.
> 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 bigtech populism with extra steps.
It would also give the hammer needed to hold companies like Amazon or Google accountable if they were anticompetitive.
She could but courts aren’t going to hear it. They almost always make decisions on the narrowest criteria and this case (and others like it) are about old fashioned collusion. The fact that participation in Real Page requires you to use their pricing is the thing that will decide this case. The algorithm won’t really be at issue at all.
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.
Two economists walking, spotted a $100 bill on the ground, and did not pick it up under the reasoning that if there were really $100 on the ground, someone else would have picked it up already.
That’s a strong claim: can you expand your reasoning and provide some data? They provide a lot in the case so I’d expect some specific examples of why you don’t agree with their claims.
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.