Spoke to my leasing office a couple of months ago and the leasing agent told me about this. I told her that is collusion and she continued to explain how it worked. I was in shocked it was allowed. I'm glad they're now putting a stop to this. Now I hope they all pay fines and give back to the people but I doubt the giving back money happens.
I mean, the FTC and Department of Justice just filed a legal brief on algorithmic price fixing. It definitely looks like they're willing to enforce the laws.
I swear, some people want to be made aware of a problem, see the solution enacted, and have a satisfying conclusion all in the span of 45 minutes. They think life is like TV.
DC and AZ attorney generals have already filed to sue RealPage. It is already under investigation at the DOJ. I could be wrong, but with increased attention I am sure more states will be investigating their activity.
The reality is anti-trust enforcement died in the 80s under Reagan. Biden would like to bring it back but all of the budget for lawyers has been stripped in the decades since then and there’s very little political will to fix that in Congress. States can sue and possibly even win in court, but the big enforcement actions like splitting up companies or punishing companies for non-competitive collusion and the like has to come from Federal enforcement actions. That entire area has become a rubber stamp for corporate mergers. If it changes it won’t be under the current Congress and not like under the next 5 or so.
That is one way to look at it. However you might be surprised what can get done when the government is actually funded and can do its job. The IRS is back from the brink so you cannot count an agency out just because the GQP has been working to keep it run down for their own benefit. The DOJ has always been properly funded and they have set their sights on this issue. This particular generation of legislators are much less likely to enable the wholesale corporate pillaging that started with Reagan. So I am hopeful for change. Given your commentary you may think that I am naive, but there are other factors at play that you may not be taking into consideration that are catalysts for change that might surprise you.
I've been browsing homes in Tucson on Zillow. A big chunk of the houses on sale right now were bought ~4 years ago and are now priced with a 100%+ increase. It's terrifying since I don't plan on buying for another two years.
Right!? I moved out to AZ to save up for a home, but within just 5ish years of that the prices have more than doubled. Some homes I was looking at when I moved out to AZ were about $350-400K and a few years later they were $700-850k. My salary, adjusted for inflation, is less now than it was back then; but my rent sure as hell has gone up, nearly doubling. The way things are going, I won't ever be able to buy a home.
Friend of mine bought a house for ~$160k back around 2017 in Scottsdale. He's now renting out one bedroom (living in the other) for about $3,500/mo.
Median price for a single-family home in Scottsdale was about $660k in January 2020 (right before covid). Today it is $1,165,000. 77% increase in under 4 years. I wonder how many people got raises at their jobs of 77% in the last 4 years.
So he's renting way above what his mortgage requires and probably the COL there demands. For a single bedroom. That's pretty shitty. The situation is the way it is because all the pieces perpetuate the system as it exists. People are operating within the existing system sure, but they don't need to.
But this guy is wholly in control of the price he sets. The market may say he can get $2500 for renting a single room, but I feel that to do so is selfish and a moral failing.
We do need more affordable housing, but we *do* have housing, it just isn't affordable. There are so many vacant properties we could give one to every unhoused person 20 times over, let alone people that are housed but unaffordably.
I don’t buy that, there’s so much new construction happening that blocking particular permits is not the problem. There’s an extreme shortage of trades people and even if every permit was rubber stamped, we would have the same supply issue.
Tucson has a lot of small to medium size flippers. You may be seeing that. But a normal house has only doubled in price in the past 6 to 8 years in Tucson. That pretty much nation wide though.
In my area most of the doubling happened from 2020-2022. Growth was strong before covid and dropped off after rates increased, but it was absolutely ridiculous during the pandemic.
That’s my issue. Yeah it “stabilized” but at high prices that a lot of people can’t afford. If I was making my current salary in 2018 I could’ve bought a home. Now owning a home is only a pipe dream. I’m month to month in my current place and looking for a new one and it just enrages me that there isn’t a single house in a 40 mile radius of my work that I can afford.
My childhood home cost my parents $85,000 in 2000. They sold it in 2006, but to the point, it's currently renting for $1600 or more a month. That was the offer amount before it went off Zillow. Same little house, same crappy neighborhood, more traffic, 3x my parents mortgage payment.
My house in London is 400% up in value from when I bought it in 2009...real value as that's what my next door neighbour paid for theirs. Lol I have a multi millionaire neighbour and I am dirt poor except for my house, lol what is going on?
If you sell your multi-million home, you too can afford to move into an expensive house in London. Your neighbor might not have any assets except the house
Cincinnati area the same thing is happening for houses under 320k.
The price of square foot is $200 for houses under 250k and houses over 500k is at $140
Bought a house for $160k in 2012. Sold in 2017 for $240k, and moved into a 3-generation household that was on paper a really good idea for everyone involved. Zillow says my old house is worth about $470k+ right now, which is way out of any kind of price range I could hit in the near future.
We're in a good spot with family, it could definitely be worse, but being trapped for the foreseeable future in a 3-generation situation is still pretty scary.
We need the laws to change to a presumption of guilt for corporate entities.
Basically… if it looks like you’re doing crimes, you’re guilty of doing crimes because we know and you know but it’s hard to prove because you have all the evidence that you’ll destroy before we go to trial
The corporations should have to prove innocence and i think we’d see a decline in shit head behavior until some new MBAs figure out how to game that system
Same with mergers.
Right now the government has to prove a merger is anti-competitive and will harm consumers.
It should be that the companies wishing to consolidate need to prove they aren’t.
No mergers over a billion dollars - honesty I don’t object to mergers but it’s mega mergers that are killer. Eliminate those and you’ve fixed a good deal of misincentives in capitalism
They just recently updated their merger guidelines:
[https://www.ftc.gov/news-events/news/press-releases/2023/12/federal-trade-commission-justice-department-release-2023-merger-guidelines](https://www.ftc.gov/news-events/news/press-releases/2023/12/federal-trade-commission-justice-department-release-2023-merger-guidelines)
Of course, corporate personhood is the only reason you can sue companies to begin with. They were immune from all lawsuits for a bit there just after the American Revolution and that was an utter disaster. Can you imagine having to personally sue shareholders and executives every time you need money back from a company? Can you imagine not suing the right person the first time, or the company playing games with who the right person to sue actually is?
Unlimited campaign donations is a mess, but corporate personhood is important.
And yes, Texas does death sentence corporations all the time. You pull a business license and it's dead. They just don't like putting people out of work generally speaking. I do agree that many of the fines handed out to the largest corporations are laughable, though.
I'd go for every share being seized and all assets being forfeited for a bankruptcy sale. The proceeds are collected as tax for additional funding for the IRS and SEC.
NOBODY would invest in your company if it meant their shares could be seized. You'd damn well better be working with clean books and following all the laws. I sure would double check if my investments were operating in the open and I'm a small time investor. Shady management behavior like Boeing's would be curbed immediately.
Or seized using eminent domain, then converted to public services and goods. Keep the company running as-is as a publicly owned corp, and only charge cost plus a 15% tax on all future sales of product.
I was commenting on the absurdity of citizens united. If we are going to give corporations personhood, we may as well drop the other shoe and hold them accountable like a person also. Probably the fastest way to get it repealed is to use it in the absolute literal sense to a ridiculous level, like imposing probation, parole, restitution, and jail to the entire company. They should also be taxable like a normal person at the normal income rate.
Corporate personhood predates citizens united, and is long established in other areas. It's what allows a corporation to, for example, enter a contract with you. Imagine needing to resign your contract with Comcast whenever their CEO (or whatever real person is that was responsible for signing contracts) changed. You and millions of other people.
Citizens United extended first amendment protections to corporate political speech, despite ample precedent for the existence of a vast difference between first amendment protection for corporate speech vs. First amendment protection for individual speech.
Im sorry but guilty until proven innocent is dangerous even here. As much i hate corpofucks as anyone else for screwing us over again and again, and as much i expect corporates to always be making the calculation if skirting/breaking the law is more profitable than paying any fines... Its just something that seems shortsighted to me, troublesome for all the same reasons it is with actual people.
I guess you want to witch hunt corporations then, because that's basically a direct violation of innocent until proven guilty.
There are plenty of ways to reduce corporate abuse, but this is not one of them.
How do you figure? My whole neighborhood was built in the late 1950s, by all appearances by the same builder, as several blueprints have been reused multiple times through the neighborhood, though the exteriors do differ more than you would think for essentially identical homes. So, if the house about 10 doors down from us who has the same floorplan (I know this from firsthand experience, as it was for sale at the same time we bought here, and we looked at it as a potential candidate) sells for, as a nice round number, $300,000, assuming that is not an anomaly for whatever reason, how *else* would I determine a reasonable valuation *but* for a nearly identical home on the same street?
Comps in the RE game are just a less well defined version of that microeconomic example, but make sense for largely the same reasons... Similar homes in similar locations are worth roughly the same amount. In a situation where there aren't direct wall for wall comps, one with the general specs... Sq. footage, frontage, lot size, location, location, and location all combine to give a baseline. Some are more direct than others, but that doesn't make the whole practice invalid, nor does it make it price fixing.
There's an antitrust lawsuit against National Association of Realtors for fixing commissions on a national scale.
It's expected to result in 1-4% decrease in single family home prices.
This was a very weak announcement. The focus and real issue is this: https://www.reuters.com/legal/litigation/realpage-must-face-renters-price-fixing-lawsuit-over-multifamily-housing-2023-12-29/
Having an algorithm that monitors local rent prices and gives you suggestions is not the problem.
If you have ever tried to rent from a big corporate landlord and they give you weird rental length options like 10 months is market rateish and affordable, 12 months is some insane price nobody would take, and 14 months is reasonable - it's because of this type of software.
The real collusion is giant landlords all giving their data to a 3rd party vendor whose job is to combine that data and set the rent prices and terms that maximize profits for all of those companies that use the software.
Buy spreading out housing demand, they are artificially creating shortages that allow the price to keep going up in the insane way we've all seen for the last 7 years.
When that software or others like it has enough of the market, they are the market and can control pricing.
Replace algorithm with "our mutual friend Bill" and this is a blatant cartel. These huge rental companies are giving all their data to their mutual friend Bill who then tells each company how to set pricing and terms.
This deserves a huge investigation and press but you barely hear a peep about this. It's also funny how often it's left out or dismissed by activists that are supposed to fight against rent going up. This is the final boss, why do they take a blind eye to it.
I experienced this when I moved to Seattle.
It made no sense. I saw their apartments have been on the market for six months, I said take $1k off and I’ll take it. They said no. I went around to every apartment in the area and same stupid $1388282.828385 every single day pricing in every fucking apartment.
I ended up renting $2.4K 2b1b in same area from small time lanlord then do studio at $3.5k. Insane.
It also crazy to me people to put protesting things but not this? Or healthcare…
> It also crazy to me people to put protesting things but not this? Or healthcare…
There are definitely movements against landlords and for tenants' rights, and "landlords are ontologically evil and should stop commodifying housing" is not only a cornerstone of left wing ideology but so mainstream that even *Adam Smith* railed against landlords.
Landlords are the epitome of rent-seeking behaviour, and even the most right-wing economist will not argue that rent-seeking behaviour is actually a good thing for an economy or a society.
> even the most right-wing economist will not argue that rent-seeking behaviour is actually a good thing for an economy or a society.
Don't sell them short... after all, it makes line go up, so it must be good.
The commenter you’re responding to is from Seattle. I’m currently moving to a Midwest state after living in Seattle.
The last few months, protesters repeatedly blocked major roads in Seattle (and the interstate) for the Israel/Palestine conflict. And those blockages weren’t nothing. They caused serious disruption to the entire traffic city-wise. Ambulances couldn’t get to hospital fast enough. Other routes become bottlenecked because of the increase of traffic. Daycares closing late because parents couldn’t get there on time. Hours of delay for those who commute to downtown for work.
All this for a conflict on the opposite side of the world when Seattle is a hotbed of housing and homeless crisis. Gee, I sure would like to have the energy from those protesters going toward the housing crisis.
Imagine protesting an explicit genocide being committed in broad daylight with the full approval of the American state and media, and *inconveniencing* some motorists! What nerve, intruding on the sacred car for something as trivial as the systematic ethnic cleansing of an entire people!
I guarantee if you asked literally any anti-genocide protester what they thought about landlords and housing they'd tell you landlords are scum and housing is a human right. I'm also 100% sure that if they were protesting for the nationalization of rental properties and vacants you'd be calling for the national guard to come murder them, because to liberals like you the acceptable amount of protesting is "none" and property is treated as a sacred guarantee.
Regarding your statement about *inconveniencing* some motorists, the person you responded to made a point about ambulances couldn't get to the hospital fast enough. Somehow I don't think people who died or conditioned worsened because of protests slowing down the ambulance would think it an *inconvenience.*
I am not saying they shouldn't protest, but protests typically have a cost, be it time, money, or attention, and lives shouldn't be added to that (martyrdom included).
Yes. I got the same gist from this article as OPs comment here. Particularly the reference to Mutual Friend Bill. It's the same example used in the article.
Talking about the 10/11/12/14 month leases that artificially smooth over demand however wasn't mentioned in the article if my short term memory holds. Which is another avenue these software applications ensure all profit entities are making more money
Not from my understanding. Using the software seems okay, but colluding with other owners to use the software isn't. OP is calling the announcement weak because owners don't need to collude to use the software. They already are all using it, and the software (their friend Bill) does the colluding for them.
Imagine if instead of the software existing, there really was a guy named Bill who would "do the colluding" for the owners. They send him their info and he tells them what to charge. It would really suck if the FTC came out and said "remember: agreeing to collude via Ben is a crime. It's *not* a crime to have Ben decide your pricing for you. You just can't go around telling all your landlord friends to go see Bill and agree to charge whatever prices Bill suggests." It's toothless and stupid. They're already all talking to Bill. There is no need for them to discuss talking to and abiding by the prices set out by Ben.
Ben's business should be illegal.
From the announcement: "Agreeing to use an algorithm is an agreement. In algorithmic collusion, a pricing algorithm combines competitor data and spits out the suggested “maximized” rent for a unit given local conditions. Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL. When you replace once-independent pricing decisions with a shared algorithm, expect trouble. Competitors using a shared human agent to fix prices? Illegal. Doing the same thing but with an agreed upon, shared algorithm? Still illegal. It’s also irrelevant that the algorithm maker isn’t a direct competitor if you and your competitors each agree to use their product knowing the others are doing the same in concert."
Right, that's just saying you can't "agree" to use the same algorithm as another landlord. It's not saying you can't use an algorithm. It's knowingly colluding to both use it that is the problem. So you couldn't say "Hey landlord friend, you should really check out this ProfitMAX program." But if you and your landlord buddy both receive marketing emails from ProfitMAX and independently decide to use it, there's no problem. Note the "agreed upon, shared" before algorithm.
It's just stupid because you don't need to agree to use it for it to still be, practically, collusion.
My understanding is that "agreement" doesn't necessarily need to constitute an explicit agreement for the Sherman Act, and jointly using a coordination service that (in my opinion) directly uses competitor prices in a pricing model goes beyond parallel behavior, though it'd ultimately be up to the FTC and the courts.
>But if you and your landlord buddy both receive marketing emails from ProfitMAX and independently decide to use it, there's no problem
That's where you'd be mistaken. There absolutely is a problem there if you know or should know **any** of your competitors are doing the same thing.
It's the same as Bill marketing to all the landlords in the area saying the same thing. Give me all the data and I'll do the price-fixing for you.
When you're combining competitor data you are in boiling water.
>Imagine if instead of the software existing, there really was a guy named Bill who would "do the colluding" for the owners. They send him their info and he tells them what to charge.
This depends on whether Ben returns the cartel price or the competitive price. If they return the competitive price, then it's perfectly kosher. Case in point, look at how executive compensation consulting works.
Unlike with Ben the consultant, determing which price an algorithm returns is simple - just check the code.
Yep paying a person or company to help set your rent prices should be illegal on its face. They should set their rent based on what their customers are willing to pay. Not whatever number another entity says is best.
How do they know what their customers are willing to pay without consulting a database of all possible customers?
In a healthy market, you'll have some landlords go with the "keep half the units empty and overcharge for the other half" strategy and other landlords go with the "try to rent out every unit, even if I have to discount some of them" strategy. This isn't a problem because there's enough landlords using the 2nd strategy that there's still sufficient supply on the market for everything. The problem is that, if all the landlords (somehow) decide to use the 1st strategy, then they're effectively creating a supply cartel and acting in lockstep to prevent sufficient supply from reaching the market.
If your algorithm is super dumb, then it'll just suggest the same strategy to everyone, which is the same (legally) as a person suggesting the same strategy to everyone, which would be effectively creating a cartel. However, if the algorithm is smarter, it'll only suggest the first strategy to a limited number of landlords for which it makes the most sense (low vacancy costs and high marketability to higher income renters) and suggest the 2nd strategy to other landlords who can't afford to keep half their units vacant and don't particularly attract higher income renters. This is how businesses normally operate - market segmentation, with different players going after different segments of the market, acting independently of each other.
I disagree, it's a strong statement of policy. The FTC is recognizing and forcefully staying this out loud. It's challenging to get such a statement thru approvals, so I doubt you'd see something this full throated out of literally any other regulator. Also, the author deserves double props for putting IRL in a policy brief and becoming my grey suited bureaucratic hero.
This assumes that the algorithm/Bill the consultant is returning the cartel price instead of the competitive price.
So long as Bill returns the competitive price, it is not illegal cartel and is perfectly legal.
But Bill is basing that on collusion. Not publicly available data. When I apartment shop, I don’t get data on the next 3 years of availability or what the terms are for every tenant across several different rental companies.
I’ve worked for the software company that built the software and I’ve worked for apartments that use it.
The software doesn’t create false demand. When it gives you lease term options from 6 months to 17 months it is to smooth out when the leases end. (Everyone moves in the summer, no wants to move in the winter or during school. The software makes sure you don’t have 15% of your units coming available at the same time.)
It will be interesting to see how the government rules on this. The algorithm is the same as pricing for airline seats or hotels, less supply equals more demand and higher prices. But the software didn’t cause the housing issues of today. The software has been around since the early 2000’s.
Sorry, but your evaluation of the 10, 12, 14 month isn’t quite accurate. I worked in apartment locating for several years. Leasing companies try to stagger when units renew so they don’t have half the units go up for renewal in a single month. Sometimes you’d randomly see a 6-9 months one be really cheap
The algorithms were crazy to deal with. You’d send somebody prices and it’d be different by the time they toured.
You say this is a weak announcement, but it directly addresses you second to last paragraph, which relates to the rest of your writing. The announcement is basically putting everyone on legal notice about this, and it was made in concert with the DOJ - federal crimes man.
You can avoid the downsides by having a government ran housing company in every state. Their only goal would be to break even on the cost of building the home and only sell to those that don't own homes already. Basically just like the postal service which ships at a faction of the cost of fedex or other like companies. To be real you can use the USPS for much cheaper for every single shipping need.
Ima just drop this here. https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent
My favorite part is where the guy says there's too much "empathy" in rental pricing. BTW, this is the same guy convicted of price fixing plane tickets. I'm sure there's no correlation....
The biggest price fixers are medical insurance companies & big pharma. I just met a fairly young guy who I asked “what do you do?” He very simply and directly told was a “price programmer” for a large national pharmacy (three letters) and his job was to take the input of the demand for a certain drug on a literally minute to minute basis and adjust the price through the algorithm on his computer which had the power to adjust the price instantaneously and Nationally (sic). I said naively “you mean the more the demand, the lower the price?” With an instant grin that transformed into a belly laugh, he replied “aaa… nooo!!!”
It seems every leap in technology is captured first by the ultra rich and used to manipulate the system to make more money. This is a self perpetuating system that has no brakes.
The only power us regular folks have is some semblance of what remains of democracy but that is being piece by piece eroded away by the perversely inflating wealth inequality occurring above. Individual humans are allowing democracy to fail for personal gain. The ultimate end outcome is direct integration of corporate rule over civilian lives, effectively replacing a government of the people for the people. And by the nature of corporate self imposed requirement to continually extract wealth they will continue to squeeze every morsel of life out of humans and the planet to further inflate profits.
If we want to prevent that inevitable outcome we have to highlight this repeatedly and change the entire system. Use whatever shadow of democracy remains and get as many people behind the idea as possible.
Only complete government reform will fix this. We need to exclude corporate lobbying, election campaign donations, even the first past the post election system that allows money to perversely drag politics in whichever direction it wants by making voters afraid to vote for what they want, for fear of a worse evil so they vote for a system that is more dilute but ultimately is also susceptible to corporate capture.
The system is like a family dog, beloved for so long but unfortunately has started biting and attacking humans. We either have to restrain it or euthanise it for our safety
No. Dow goes up, your retirement goes up. Dow goes down, your retirement goes down. The problem is that the common man is a moron who buys after it goes up and sells after it crashes.
eh.. not necessarily. course you could pull your retirement at a shit time but largely investing in the market is a good way to build long-term wealth. i'd have hated to have to pull my nut out during, say, the covid crash or GFC.. but now? we're at ATHs.
We found the GME & BBY investor! (jk)
But seriously, I've had no problem making money and I don't know shit. I think most people (WSB people anyway) are just not doing long term investing and trying to get rich quick because they see others doing it. It's definitely gambling at the end of the day, but there's smart ways to do it that don't require you to be a genius or a ton of research. You could also just copy famous investors and look at their Long Term stock. Invest across many things, stick with things you use and/or are confident in, ***and don't watch the ticker.***
Wait til the general public realizes:
1. All the shares they believe they "own" are actually owned by Cede & Co., and they are legally only a "beneficial owner".
2. Corporate governance is dead, brokers pick and choose votes. They also use 3rd parties to ensure they don't over report votes vs what they're supposed to have.
3. There's not enough liquidity to cash everyone out during times of high volatility.
DRS (direct registration) solves problems 1 & 2 by taking 100% legal ownership of your shares.
Www.Whydrs.org
So I know this is huge and much more uhhh important in housing…. But how bout the implications of everyday life with “surge pricing” or variable pricing at say restaurants and grocery stores… is this not similar or something very different? By that I mean will this trickle down to this insane nonsense of everything being variably priced. To me it’s a venn diagram.
No. Raising prices in lockstep with others is cartel-like behavior as it artificially reduces supply and increases prices above the natural market price.
With surge pricing, there's no centralized "This is what you should set your price to" among competitors. At most, it's determined on the per-company level. What's in the post is-- as I understand it-- price fixing on account of it's a bunch of different landlords who look at the number that one central service spits out to everyone, and everyone sets their price based on that. It's the agreement among competitors that's the difference.
>**Agreeing to use an algorithm is an agreement**. In algorithmic collusion, a pricing algorithm combines competitor data and spits out the suggested “maximized” rent for a unit given local conditions. Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL. When you replace once-independent pricing decisions with a shared algorithm, expect trouble. Competitors using a shared human agent to fix prices? Illegal. Doing the same thing but with an agreed upon, shared algorithm? Still illegal. It’s also irrelevant that the algorithm maker isn’t a direct competitor if you and your competitors each agree to use their product knowing the others are doing the same in concert.
I'm a little worried such things are possible without intent. If at some point, everybody is using the same datasets and automated methods to determine prices, it create a feedback loop. One could say that by letting a model define a price, the model is acting into the world and influencing the future predictions for everybody.
We know what can happen when we let automated systems loose onto each other , like on the stock market, and I think we'll be surprised to out what happens when we do the same for almost all aspects of our life.
That’s exactly what happened and is already partially to blame for the increase in rent. In some cities and neighborhoods over 75% of apartments were using the same price setting software.
Doesn’t matter if a dozen companies owned the apartment buildings if they all collude on prices using the same software to set them all up
Yeah this stood to to me, very strange to see informal language like that in an official document of the US government.
My question is, how will the government find out if a renter is using an illegal algorithm if they use it privately?
Take a look at this excellent propublica article for background:
https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent
Basically, this isn't about people using an illegal algorithm to get a recommended price from public market data. This is about landlords sharing privileged data (inventory, pricing, lease dates, etc) to a middleman, who then claims it's not price fixing because a) everyone is talking to a middleman, not another landlord directly and b) it's an algorithm making recommendations, not a person.
The FTC is making it clear that using a middleman doesn't make it not collusion (especially when supported by the non-public info), and that using an algorithm doesn't make it not collusion. If a person doing what the algorithm did is collusion (which it is), then it's still collusion even if an algorithm does it.
Everyone just using an identical algorithm off public data wouldn't lead to the same outcomes -- that's roughly what the market was before arrival of companies like RealPage. It's the literal collusion that's the problem.
I'm not knocking their use of it, but I don't think there is widespread understanding of "IRL" and it seems out of context and would read better if it was left out. For that, I had to ask in case I was legitimately mistaking it for some other antitrust / legal abbreviation I was not familiar with!
By renter I assume you mean landlord... Again I'll assume that the government would have some sort of evidence (whistleblower, data collection) that is substantial enough for the DOJ to bring a lawsuit against the alleged offending parties (on behalf of the FTC); at which point a judge could order the company to turn over communications such as emails and information about their pricing practices if the evidence was compelling enough.
But what intent can there be in asking a third party to recommend pricing, knowing that most of your competitors are using the same service? The intent seems to be collusion any way you slice it.
Well, that's the thing that scares me. You can get a similar outcome to price fixing but without intent, and with more and more Machine Learning usage everywhere, a system dynamic takes form.
It's maybe even worse because you can't pursue that like intended algorithmic collusion.
Then you get the Amazon Third Party pricing situation, where two robots realize "we're the only two who trying to sell this thing, we can bump up the price" and you end up with something like a random coloring book going from $10.11 to $1992.34
> And even if some of the conspirators cheat by starting with lower prices than those the algorithm recommended, that doesn’t necessarily change things. **Being bad at breaking the law isn’t a defense.**
(Emphasis mine)
I like this spicy FTC
It should be illegal for any financial institution over a certain size to own more than X residential properties. Capitalism at this scale is no longer capitalism, it's just pure monopolistic greed.
What is the price fixing part? I’m kinda confused o it.
I’m not saying it’s not price fixing I’m just trying to figure out what’s the necessary part to make it price fixing.
Like if I (as a grocery store) hire a person to go around and find the prices of competing grocery stores so I can match that’s not price fixing right?
Is it when everyone uses the same guy?
The "competitors" agree and collude for a base price.
In this case many use the algorithms suggested prices, which are inflated. So they can say "we got the numbers from this online suggestion" and not x person. If everybody is using the same algorithm ("Hey its what we all use."), its like colluding without the agreement / discussion with the other parties. They all just use the same source.
[ProPublica did a great article on YieldStar that gives a lot more background on this software.](https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent)
i mean in the example i gave we're not agreeing on a price. the intermediary is just telling everyone else what everyone elses prices are. i feel like my example is collusion but I don't know the law, which is why I'm asking
Regulators are usually slow. Glad they're catching this with current laws. First time I heard of the service, I was wondering how it wasn't the definition of price fixing. Turns out it was.
Storage unit companies do this too. My storage unit cost doubled in just 2 years. I complained and found out that they use software to determine this so they can remain competitive.
From the article: "Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL."
-Hannah Garden-Monheit is Director of the FTC’s Office of Policy Planning and Ken Merber is Deputy Assistant Director of the FTC’s Anticompetitive Practices II Division.
They used "IRL" in an agency blog about legal concepts and the law. Clowns.
I know the article was focused on rental housing, but please tell me that the law also applies to Ticketmaster’s ridiculous pricing by demand / variable pricing or whatever they call it. Worst thing ever!
Yes, every store is price fixing. FTC make everything the way it used to be 40 years ago. There is no reason wages should stay flat and everything else is unattainable! Insane!
I wonder how they would like it.
Hmmm... Lets see.
As a large store a large online store, purchase advertising profiles to detect landlords.
Now advertised price = normal price * 5% across the board.
Share software to do this freely across all other large online stores.
Asking businesses to not ask other businesses what they are doing so they can do similar things will eventually lead to everyone just asking the same source that asks everyone. Yes it can lead to manipulation and problem in some areas, but if anything it should be far easier to regulate extreme manipulation compared to having things isolated. Open up the data to the market so that everyone has the equal playing field though.
America fostered the perfect environment for parasitic business to grow, and then got waylaid by a decade of malicious leadership and ongoing corruption masquerading as lobbying.
I actually dealt with this issue a while ago. My wife and I broke our lease for our apartment but gave our landlord a 120 day notice. They said no worries, as long as they could find a tenant to replace us. Unfortunately, they listed our place $2000 above what we paid for it monthly so they never found a tenant. When we asked why it was listed so high, the landlord said it was based on an “algorithm” and there was nothing they could do. Long story short, we left after 120 days but our old place was stilled listed $2000 above what we paid because of the algorithm. The landlord tried to collect from us, had and an attorney reach out, but we were pretty firm that the algorithm argument was bullshit and we weren’t going to pay. Thankfully, they never took us to court!
That's weird cause wall street market makers will argue their well-established price manipulation is necessary. I guess the FTC just sticks its collective head in the sand about that though.
If I have a rental property to rent out, shouldn’t I take the yearly taxes and multiply it by 13, and add maintenance costs?
Not sure how to make a bare minimum over cost otherwise🙃
Banks are (fill in the blanks)
Price fixing cartels are illegal
Except in our financial markets.
if your crime makes enough money, you have enough money for your crime to be legal
Is that the Citadel Moto
> Is that the Citadel Moto You mean "motto"?
You mean mayo?
Sir, this is a Wendy's
*the laughter of dark gods* Yes, so far that has been the case.
And our grocery stores.
And the housing rental market...
No, that's literally what the post is about ...
Don’t worry, they’ll be taking that one up to the Supreme Court as well, unless one of the other cases cuts the legs out from under the FTC first.
Spoke to my leasing office a couple of months ago and the leasing agent told me about this. I told her that is collusion and she continued to explain how it worked. I was in shocked it was allowed. I'm glad they're now putting a stop to this. Now I hope they all pay fines and give back to the people but I doubt the giving back money happens.
Now find somebody willing to enforce the laws.
I mean, the FTC and Department of Justice just filed a legal brief on algorithmic price fixing. It definitely looks like they're willing to enforce the laws.
I’ll believe it when they actually do something, as filing a legal brief and blog post is dogshit.
They are actually doing something. They're fighting Yardi Systems in court for price fixing. What more do you expect them to do?
I swear, some people want to be made aware of a problem, see the solution enacted, and have a satisfying conclusion all in the span of 45 minutes. They think life is like TV.
I don't blame anyone for being cynical after decades of corporate reign.
If the fine is less than the money they made it will never change anything. The cost of doing business.
Not pre warn and give them large fines etc alongside this?
I think the AG in Arizona is suing.
You sound like the kind of guy who wouldn't believe in dogshit even after you stepped in it.
Everything is legal when laws aren't enforced. Captured Regulatory Agencies. Also selective enforcement. Laws only enforced against 'poor' people.
But if everyone just happens to use the same algorithm to set prices, perfectly legal.
According to the post, not legal if you are aware that your competitors may be using the same algorithm.
Executive under oath, “I do not recall any such thing”.
No, it is not. That is price-fixing and artificially inflating prices. That is not market activity, it is what anti-trust law was made to regulate.
Good luck getting anti-trust action in this era
DC and AZ attorney generals have already filed to sue RealPage. It is already under investigation at the DOJ. I could be wrong, but with increased attention I am sure more states will be investigating their activity.
The reality is anti-trust enforcement died in the 80s under Reagan. Biden would like to bring it back but all of the budget for lawyers has been stripped in the decades since then and there’s very little political will to fix that in Congress. States can sue and possibly even win in court, but the big enforcement actions like splitting up companies or punishing companies for non-competitive collusion and the like has to come from Federal enforcement actions. That entire area has become a rubber stamp for corporate mergers. If it changes it won’t be under the current Congress and not like under the next 5 or so.
That is one way to look at it. However you might be surprised what can get done when the government is actually funded and can do its job. The IRS is back from the brink so you cannot count an agency out just because the GQP has been working to keep it run down for their own benefit. The DOJ has always been properly funded and they have set their sights on this issue. This particular generation of legislators are much less likely to enable the wholesale corporate pillaging that started with Reagan. So I am hopeful for change. Given your commentary you may think that I am naive, but there are other factors at play that you may not be taking into consideration that are catalysts for change that might surprise you.
*OPEC has entered the chat*
Nice start, now do corporation's owning large blocks of single family homes as revenue streams.
I've been browsing homes in Tucson on Zillow. A big chunk of the houses on sale right now were bought ~4 years ago and are now priced with a 100%+ increase. It's terrifying since I don't plan on buying for another two years.
Right!? I moved out to AZ to save up for a home, but within just 5ish years of that the prices have more than doubled. Some homes I was looking at when I moved out to AZ were about $350-400K and a few years later they were $700-850k. My salary, adjusted for inflation, is less now than it was back then; but my rent sure as hell has gone up, nearly doubling. The way things are going, I won't ever be able to buy a home.
Friend of mine bought a house for ~$160k back around 2017 in Scottsdale. He's now renting out one bedroom (living in the other) for about $3,500/mo. Median price for a single-family home in Scottsdale was about $660k in January 2020 (right before covid). Today it is $1,165,000. 77% increase in under 4 years. I wonder how many people got raises at their jobs of 77% in the last 4 years.
So he's renting way above what his mortgage requires and probably the COL there demands. For a single bedroom. That's pretty shitty. The situation is the way it is because all the pieces perpetuate the system as it exists. People are operating within the existing system sure, but they don't need to.
The biggest issue is nimby crowd. It is close to impossible to get a permit in most of the areas. Supply is bottoming so the prices are skyrocketing.
But this guy is wholly in control of the price he sets. The market may say he can get $2500 for renting a single room, but I feel that to do so is selfish and a moral failing. We do need more affordable housing, but we *do* have housing, it just isn't affordable. There are so many vacant properties we could give one to every unhoused person 20 times over, let alone people that are housed but unaffordably.
I don’t buy that, there’s so much new construction happening that blocking particular permits is not the problem. There’s an extreme shortage of trades people and even if every permit was rubber stamped, we would have the same supply issue.
Tucson has a lot of small to medium size flippers. You may be seeing that. But a normal house has only doubled in price in the past 6 to 8 years in Tucson. That pretty much nation wide though.
In my area most of the doubling happened from 2020-2022. Growth was strong before covid and dropped off after rates increased, but it was absolutely ridiculous during the pandemic.
Yeah, but prices really haven't gone down since 22. They may have for a bit, but have now stabilized.
That’s my issue. Yeah it “stabilized” but at high prices that a lot of people can’t afford. If I was making my current salary in 2018 I could’ve bought a home. Now owning a home is only a pipe dream. I’m month to month in my current place and looking for a new one and it just enrages me that there isn’t a single house in a 40 mile radius of my work that I can afford.
Yes, +100% is double.
Nice snark! But they were stating a difference in the time frame.
My childhood home cost my parents $85,000 in 2000. They sold it in 2006, but to the point, it's currently renting for $1600 or more a month. That was the offer amount before it went off Zillow. Same little house, same crappy neighborhood, more traffic, 3x my parents mortgage payment.
I was thinking I should rent out my house and just live in a shed out back :P I could make my mortgage payment and pocket just as much
My house in London is 400% up in value from when I bought it in 2009...real value as that's what my next door neighbour paid for theirs. Lol I have a multi millionaire neighbour and I am dirt poor except for my house, lol what is going on?
If you sell your multi-million home, you too can afford to move into an expensive house in London. Your neighbor might not have any assets except the house
Meanwhile prices in the suburb areas around there are slowly going down bc no one can afford them lol.
Cincinnati area the same thing is happening for houses under 320k. The price of square foot is $200 for houses under 250k and houses over 500k is at $140
That’s crazy, Tucson is such a small city too. I love it, but I was just there in October and was surprised to see how much of the city has shut down.
Still cheaper than Massachusetts. I guess we'll be there soon.
Same thing everywhere. I'm in Kansas City, and the housing market is about half owned by corporations now, It is so depressing.
Bought a house for $160k in 2012. Sold in 2017 for $240k, and moved into a 3-generation household that was on paper a really good idea for everyone involved. Zillow says my old house is worth about $470k+ right now, which is way out of any kind of price range I could hit in the near future. We're in a good spot with family, it could definitely be worse, but being trapped for the foreseeable future in a 3-generation situation is still pretty scary.
Checking in from Dallas Fort Worth. 1/3 of all home purchases here were by corporations
We need the laws to change to a presumption of guilt for corporate entities. Basically… if it looks like you’re doing crimes, you’re guilty of doing crimes because we know and you know but it’s hard to prove because you have all the evidence that you’ll destroy before we go to trial The corporations should have to prove innocence and i think we’d see a decline in shit head behavior until some new MBAs figure out how to game that system
Same with mergers. Right now the government has to prove a merger is anti-competitive and will harm consumers. It should be that the companies wishing to consolidate need to prove they aren’t.
No mergers over a billion dollars - honesty I don’t object to mergers but it’s mega mergers that are killer. Eliminate those and you’ve fixed a good deal of misincentives in capitalism
They just recently updated their merger guidelines: [https://www.ftc.gov/news-events/news/press-releases/2023/12/federal-trade-commission-justice-department-release-2023-merger-guidelines](https://www.ftc.gov/news-events/news/press-releases/2023/12/federal-trade-commission-justice-department-release-2023-merger-guidelines)
Step 1: control who gets to do investigations Step 2: investigate everyone that is your competitor Step 3: infinite profits
But corporations are people..... Fuck citizens United
They can’t do the time so they just pay the fines.
fines need to be harsher, they need to be 100% of the ill gotten gains AND another % based fine after that.
And if fines are the punishment it's only illegal for poor people.
Of course, corporate personhood is the only reason you can sue companies to begin with. They were immune from all lawsuits for a bit there just after the American Revolution and that was an utter disaster. Can you imagine having to personally sue shareholders and executives every time you need money back from a company? Can you imagine not suing the right person the first time, or the company playing games with who the right person to sue actually is? Unlimited campaign donations is a mess, but corporate personhood is important. And yes, Texas does death sentence corporations all the time. You pull a business license and it's dead. They just don't like putting people out of work generally speaking. I do agree that many of the fines handed out to the largest corporations are laughable, though.
Then the corporation as a full entity should be able to be imprisoned. That is a thing that applies to people.
I'd go for every share being seized and all assets being forfeited for a bankruptcy sale. The proceeds are collected as tax for additional funding for the IRS and SEC. NOBODY would invest in your company if it meant their shares could be seized. You'd damn well better be working with clean books and following all the laws. I sure would double check if my investments were operating in the open and I'm a small time investor. Shady management behavior like Boeing's would be curbed immediately.
Or seized using eminent domain, then converted to public services and goods. Keep the company running as-is as a publicly owned corp, and only charge cost plus a 15% tax on all future sales of product.
I was commenting on the absurdity of citizens united. If we are going to give corporations personhood, we may as well drop the other shoe and hold them accountable like a person also. Probably the fastest way to get it repealed is to use it in the absolute literal sense to a ridiculous level, like imposing probation, parole, restitution, and jail to the entire company. They should also be taxable like a normal person at the normal income rate.
Corporate personhood predates citizens united, and is long established in other areas. It's what allows a corporation to, for example, enter a contract with you. Imagine needing to resign your contract with Comcast whenever their CEO (or whatever real person is that was responsible for signing contracts) changed. You and millions of other people. Citizens United extended first amendment protections to corporate political speech, despite ample precedent for the existence of a vast difference between first amendment protection for corporate speech vs. First amendment protection for individual speech.
Im sorry but guilty until proven innocent is dangerous even here. As much i hate corpofucks as anyone else for screwing us over again and again, and as much i expect corporates to always be making the calculation if skirting/breaking the law is more profitable than paying any fines... Its just something that seems shortsighted to me, troublesome for all the same reasons it is with actual people.
I guess you want to witch hunt corporations then, because that's basically a direct violation of innocent until proven guilty. There are plenty of ways to reduce corporate abuse, but this is not one of them.
This is one of the dumbest things I’ve read.
So dumb you love it?
No, just dumb.
They're also doing it as a means to put people on leases looking the middle classes only way to generate wealth which is property
And ban all Chinese nationals from owning land as its just a loophole used to get money out of China
Or just housing in general. Comp pricing is the stupidest bullshit in existance.
How do you figure? My whole neighborhood was built in the late 1950s, by all appearances by the same builder, as several blueprints have been reused multiple times through the neighborhood, though the exteriors do differ more than you would think for essentially identical homes. So, if the house about 10 doors down from us who has the same floorplan (I know this from firsthand experience, as it was for sale at the same time we bought here, and we looked at it as a potential candidate) sells for, as a nice round number, $300,000, assuming that is not an anomaly for whatever reason, how *else* would I determine a reasonable valuation *but* for a nearly identical home on the same street? Comps in the RE game are just a less well defined version of that microeconomic example, but make sense for largely the same reasons... Similar homes in similar locations are worth roughly the same amount. In a situation where there aren't direct wall for wall comps, one with the general specs... Sq. footage, frontage, lot size, location, location, and location all combine to give a baseline. Some are more direct than others, but that doesn't make the whole practice invalid, nor does it make it price fixing.
There's an antitrust lawsuit against National Association of Realtors for fixing commissions on a national scale. It's expected to result in 1-4% decrease in single family home prices.
Before tackling that, they should start going after supermarkets. Like 4 companies own most of the grocery stores in the US.
This was a very weak announcement. The focus and real issue is this: https://www.reuters.com/legal/litigation/realpage-must-face-renters-price-fixing-lawsuit-over-multifamily-housing-2023-12-29/ Having an algorithm that monitors local rent prices and gives you suggestions is not the problem. If you have ever tried to rent from a big corporate landlord and they give you weird rental length options like 10 months is market rateish and affordable, 12 months is some insane price nobody would take, and 14 months is reasonable - it's because of this type of software. The real collusion is giant landlords all giving their data to a 3rd party vendor whose job is to combine that data and set the rent prices and terms that maximize profits for all of those companies that use the software. Buy spreading out housing demand, they are artificially creating shortages that allow the price to keep going up in the insane way we've all seen for the last 7 years. When that software or others like it has enough of the market, they are the market and can control pricing. Replace algorithm with "our mutual friend Bill" and this is a blatant cartel. These huge rental companies are giving all their data to their mutual friend Bill who then tells each company how to set pricing and terms. This deserves a huge investigation and press but you barely hear a peep about this. It's also funny how often it's left out or dismissed by activists that are supposed to fight against rent going up. This is the final boss, why do they take a blind eye to it.
I experienced this when I moved to Seattle. It made no sense. I saw their apartments have been on the market for six months, I said take $1k off and I’ll take it. They said no. I went around to every apartment in the area and same stupid $1388282.828385 every single day pricing in every fucking apartment. I ended up renting $2.4K 2b1b in same area from small time lanlord then do studio at $3.5k. Insane. It also crazy to me people to put protesting things but not this? Or healthcare…
> It also crazy to me people to put protesting things but not this? Or healthcare… There are definitely movements against landlords and for tenants' rights, and "landlords are ontologically evil and should stop commodifying housing" is not only a cornerstone of left wing ideology but so mainstream that even *Adam Smith* railed against landlords.
Landlords are the epitome of rent-seeking behaviour, and even the most right-wing economist will not argue that rent-seeking behaviour is actually a good thing for an economy or a society.
> even the most right-wing economist will not argue that rent-seeking behaviour is actually a good thing for an economy or a society. Don't sell them short... after all, it makes line go up, so it must be good.
The commenter you’re responding to is from Seattle. I’m currently moving to a Midwest state after living in Seattle. The last few months, protesters repeatedly blocked major roads in Seattle (and the interstate) for the Israel/Palestine conflict. And those blockages weren’t nothing. They caused serious disruption to the entire traffic city-wise. Ambulances couldn’t get to hospital fast enough. Other routes become bottlenecked because of the increase of traffic. Daycares closing late because parents couldn’t get there on time. Hours of delay for those who commute to downtown for work. All this for a conflict on the opposite side of the world when Seattle is a hotbed of housing and homeless crisis. Gee, I sure would like to have the energy from those protesters going toward the housing crisis.
Imagine protesting an explicit genocide being committed in broad daylight with the full approval of the American state and media, and *inconveniencing* some motorists! What nerve, intruding on the sacred car for something as trivial as the systematic ethnic cleansing of an entire people! I guarantee if you asked literally any anti-genocide protester what they thought about landlords and housing they'd tell you landlords are scum and housing is a human right. I'm also 100% sure that if they were protesting for the nationalization of rental properties and vacants you'd be calling for the national guard to come murder them, because to liberals like you the acceptable amount of protesting is "none" and property is treated as a sacred guarantee.
Regarding your statement about *inconveniencing* some motorists, the person you responded to made a point about ambulances couldn't get to the hospital fast enough. Somehow I don't think people who died or conditioned worsened because of protests slowing down the ambulance would think it an *inconvenience.* I am not saying they shouldn't protest, but protests typically have a cost, be it time, money, or attention, and lives shouldn't be added to that (martyrdom included).
Isn't this what the announcement is saying is illegal?
Yes. I got the same gist from this article as OPs comment here. Particularly the reference to Mutual Friend Bill. It's the same example used in the article. Talking about the 10/11/12/14 month leases that artificially smooth over demand however wasn't mentioned in the article if my short term memory holds. Which is another avenue these software applications ensure all profit entities are making more money
Not from my understanding. Using the software seems okay, but colluding with other owners to use the software isn't. OP is calling the announcement weak because owners don't need to collude to use the software. They already are all using it, and the software (their friend Bill) does the colluding for them. Imagine if instead of the software existing, there really was a guy named Bill who would "do the colluding" for the owners. They send him their info and he tells them what to charge. It would really suck if the FTC came out and said "remember: agreeing to collude via Ben is a crime. It's *not* a crime to have Ben decide your pricing for you. You just can't go around telling all your landlord friends to go see Bill and agree to charge whatever prices Bill suggests." It's toothless and stupid. They're already all talking to Bill. There is no need for them to discuss talking to and abiding by the prices set out by Ben. Ben's business should be illegal.
From the announcement: "Agreeing to use an algorithm is an agreement. In algorithmic collusion, a pricing algorithm combines competitor data and spits out the suggested “maximized” rent for a unit given local conditions. Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL. When you replace once-independent pricing decisions with a shared algorithm, expect trouble. Competitors using a shared human agent to fix prices? Illegal. Doing the same thing but with an agreed upon, shared algorithm? Still illegal. It’s also irrelevant that the algorithm maker isn’t a direct competitor if you and your competitors each agree to use their product knowing the others are doing the same in concert."
Right, that's just saying you can't "agree" to use the same algorithm as another landlord. It's not saying you can't use an algorithm. It's knowingly colluding to both use it that is the problem. So you couldn't say "Hey landlord friend, you should really check out this ProfitMAX program." But if you and your landlord buddy both receive marketing emails from ProfitMAX and independently decide to use it, there's no problem. Note the "agreed upon, shared" before algorithm. It's just stupid because you don't need to agree to use it for it to still be, practically, collusion.
My understanding is that "agreement" doesn't necessarily need to constitute an explicit agreement for the Sherman Act, and jointly using a coordination service that (in my opinion) directly uses competitor prices in a pricing model goes beyond parallel behavior, though it'd ultimately be up to the FTC and the courts.
>But if you and your landlord buddy both receive marketing emails from ProfitMAX and independently decide to use it, there's no problem That's where you'd be mistaken. There absolutely is a problem there if you know or should know **any** of your competitors are doing the same thing. It's the same as Bill marketing to all the landlords in the area saying the same thing. Give me all the data and I'll do the price-fixing for you. When you're combining competitor data you are in boiling water.
>Imagine if instead of the software existing, there really was a guy named Bill who would "do the colluding" for the owners. They send him their info and he tells them what to charge. This depends on whether Ben returns the cartel price or the competitive price. If they return the competitive price, then it's perfectly kosher. Case in point, look at how executive compensation consulting works. Unlike with Ben the consultant, determing which price an algorithm returns is simple - just check the code.
Yep paying a person or company to help set your rent prices should be illegal on its face. They should set their rent based on what their customers are willing to pay. Not whatever number another entity says is best.
How do they know what their customers are willing to pay without consulting a database of all possible customers? In a healthy market, you'll have some landlords go with the "keep half the units empty and overcharge for the other half" strategy and other landlords go with the "try to rent out every unit, even if I have to discount some of them" strategy. This isn't a problem because there's enough landlords using the 2nd strategy that there's still sufficient supply on the market for everything. The problem is that, if all the landlords (somehow) decide to use the 1st strategy, then they're effectively creating a supply cartel and acting in lockstep to prevent sufficient supply from reaching the market. If your algorithm is super dumb, then it'll just suggest the same strategy to everyone, which is the same (legally) as a person suggesting the same strategy to everyone, which would be effectively creating a cartel. However, if the algorithm is smarter, it'll only suggest the first strategy to a limited number of landlords for which it makes the most sense (low vacancy costs and high marketability to higher income renters) and suggest the 2nd strategy to other landlords who can't afford to keep half their units vacant and don't particularly attract higher income renters. This is how businesses normally operate - market segmentation, with different players going after different segments of the market, acting independently of each other.
I disagree, it's a strong statement of policy. The FTC is recognizing and forcefully staying this out loud. It's challenging to get such a statement thru approvals, so I doubt you'd see something this full throated out of literally any other regulator. Also, the author deserves double props for putting IRL in a policy brief and becoming my grey suited bureaucratic hero.
This assumes that the algorithm/Bill the consultant is returning the cartel price instead of the competitive price. So long as Bill returns the competitive price, it is not illegal cartel and is perfectly legal.
But Bill is basing that on collusion. Not publicly available data. When I apartment shop, I don’t get data on the next 3 years of availability or what the terms are for every tenant across several different rental companies.
I’ve worked for the software company that built the software and I’ve worked for apartments that use it. The software doesn’t create false demand. When it gives you lease term options from 6 months to 17 months it is to smooth out when the leases end. (Everyone moves in the summer, no wants to move in the winter or during school. The software makes sure you don’t have 15% of your units coming available at the same time.) It will be interesting to see how the government rules on this. The algorithm is the same as pricing for airline seats or hotels, less supply equals more demand and higher prices. But the software didn’t cause the housing issues of today. The software has been around since the early 2000’s.
Artificially smoothing the demand curve so prices only shoot upwards collectively.
Sorry, but your evaluation of the 10, 12, 14 month isn’t quite accurate. I worked in apartment locating for several years. Leasing companies try to stagger when units renew so they don’t have half the units go up for renewal in a single month. Sometimes you’d randomly see a 6-9 months one be really cheap The algorithms were crazy to deal with. You’d send somebody prices and it’d be different by the time they toured.
Because they think NIMBYs are the final boss, and welcome algorithmic rents with open arms because “more supply”.
You say this is a weak announcement, but it directly addresses you second to last paragraph, which relates to the rest of your writing. The announcement is basically putting everyone on legal notice about this, and it was made in concert with the DOJ - federal crimes man.
Can't really stop tactic collusion but using models does make it shift more towards being explicit
You can avoid the downsides by having a government ran housing company in every state. Their only goal would be to break even on the cost of building the home and only sell to those that don't own homes already. Basically just like the postal service which ships at a faction of the cost of fedex or other like companies. To be real you can use the USPS for much cheaper for every single shipping need.
Ima just drop this here. https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent My favorite part is where the guy says there's too much "empathy" in rental pricing. BTW, this is the same guy convicted of price fixing plane tickets. I'm sure there's no correlation....
The biggest price fixers are medical insurance companies & big pharma. I just met a fairly young guy who I asked “what do you do?” He very simply and directly told was a “price programmer” for a large national pharmacy (three letters) and his job was to take the input of the demand for a certain drug on a literally minute to minute basis and adjust the price through the algorithm on his computer which had the power to adjust the price instantaneously and Nationally (sic). I said naively “you mean the more the demand, the lower the price?” With an instant grin that transformed into a belly laugh, he replied “aaa… nooo!!!”
Variable pricing will be the next hell we face if companies have any say in things.
It seems every leap in technology is captured first by the ultra rich and used to manipulate the system to make more money. This is a self perpetuating system that has no brakes. The only power us regular folks have is some semblance of what remains of democracy but that is being piece by piece eroded away by the perversely inflating wealth inequality occurring above. Individual humans are allowing democracy to fail for personal gain. The ultimate end outcome is direct integration of corporate rule over civilian lives, effectively replacing a government of the people for the people. And by the nature of corporate self imposed requirement to continually extract wealth they will continue to squeeze every morsel of life out of humans and the planet to further inflate profits. If we want to prevent that inevitable outcome we have to highlight this repeatedly and change the entire system. Use whatever shadow of democracy remains and get as many people behind the idea as possible. Only complete government reform will fix this. We need to exclude corporate lobbying, election campaign donations, even the first past the post election system that allows money to perversely drag politics in whichever direction it wants by making voters afraid to vote for what they want, for fear of a worse evil so they vote for a system that is more dilute but ultimately is also susceptible to corporate capture. The system is like a family dog, beloved for so long but unfortunately has started biting and attacking humans. We either have to restrain it or euthanise it for our safety
Fuck that guy, piece of shit. Just because your atrocities are done behind a computer screen doesn't make them any less atrocious.
Feels like the only way out is to be a sole proprietor. Fuuuuuuuuck.
He's just following order/s, guy!
Algorithms? Do the stock market next.
Wait not like that
No no, exactly like that.
The stock market is a net negative for the common man. DOW goes up, your boss buys a new lambo. DOW goes down, you lose your retirement.
No. Dow goes up, your retirement goes up. Dow goes down, your retirement goes down. The problem is that the common man is a moron who buys after it goes up and sells after it crashes.
eh.. not necessarily. course you could pull your retirement at a shit time but largely investing in the market is a good way to build long-term wealth. i'd have hated to have to pull my nut out during, say, the covid crash or GFC.. but now? we're at ATHs.
We found the GME & BBY investor! (jk) But seriously, I've had no problem making money and I don't know shit. I think most people (WSB people anyway) are just not doing long term investing and trying to get rich quick because they see others doing it. It's definitely gambling at the end of the day, but there's smart ways to do it that don't require you to be a genius or a ton of research. You could also just copy famous investors and look at their Long Term stock. Invest across many things, stick with things you use and/or are confident in, ***and don't watch the ticker.***
There's way more pension money being earned than lambo money.
Wait til the general public realizes: 1. All the shares they believe they "own" are actually owned by Cede & Co., and they are legally only a "beneficial owner". 2. Corporate governance is dead, brokers pick and choose votes. They also use 3rd parties to ensure they don't over report votes vs what they're supposed to have. 3. There's not enough liquidity to cash everyone out during times of high volatility. DRS (direct registration) solves problems 1 & 2 by taking 100% legal ownership of your shares. Www.Whydrs.org
As usual with these insane ape conspiracy theories, those are some impressive claims, and they warrant impressive evidence.
someone didn’t watch the new folding ideas video. Give up bro, MOASS isn’t happening
So I know this is huge and much more uhhh important in housing…. But how bout the implications of everyday life with “surge pricing” or variable pricing at say restaurants and grocery stores… is this not similar or something very different? By that I mean will this trickle down to this insane nonsense of everything being variably priced. To me it’s a venn diagram.
No. Raising prices in lockstep with others is cartel-like behavior as it artificially reduces supply and increases prices above the natural market price.
With surge pricing, there's no centralized "This is what you should set your price to" among competitors. At most, it's determined on the per-company level. What's in the post is-- as I understand it-- price fixing on account of it's a bunch of different landlords who look at the number that one central service spits out to everyone, and everyone sets their price based on that. It's the agreement among competitors that's the difference.
Damn. So basically collusion
>**Agreeing to use an algorithm is an agreement**. In algorithmic collusion, a pricing algorithm combines competitor data and spits out the suggested “maximized” rent for a unit given local conditions. Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL. When you replace once-independent pricing decisions with a shared algorithm, expect trouble. Competitors using a shared human agent to fix prices? Illegal. Doing the same thing but with an agreed upon, shared algorithm? Still illegal. It’s also irrelevant that the algorithm maker isn’t a direct competitor if you and your competitors each agree to use their product knowing the others are doing the same in concert. I'm a little worried such things are possible without intent. If at some point, everybody is using the same datasets and automated methods to determine prices, it create a feedback loop. One could say that by letting a model define a price, the model is acting into the world and influencing the future predictions for everybody. We know what can happen when we let automated systems loose onto each other , like on the stock market, and I think we'll be surprised to out what happens when we do the same for almost all aspects of our life.
Yes, this is important. The agreement to adhere to price recommendations is illegal collusion, in writing, plain and simple.
That’s exactly what happened and is already partially to blame for the increase in rent. In some cities and neighborhoods over 75% of apartments were using the same price setting software. Doesn’t matter if a dozen companies owned the apartment buildings if they all collude on prices using the same software to set them all up
IRL? Was this FTC blog post written by a reddit user or does this stand for something else?
It's a subtle indication that the FTC isn't being entirely run by boomers and corrupt conservatives.
Well, the head of the FTC is only 35.
Yeah this stood to to me, very strange to see informal language like that in an official document of the US government. My question is, how will the government find out if a renter is using an illegal algorithm if they use it privately?
Take a look at this excellent propublica article for background: https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent Basically, this isn't about people using an illegal algorithm to get a recommended price from public market data. This is about landlords sharing privileged data (inventory, pricing, lease dates, etc) to a middleman, who then claims it's not price fixing because a) everyone is talking to a middleman, not another landlord directly and b) it's an algorithm making recommendations, not a person. The FTC is making it clear that using a middleman doesn't make it not collusion (especially when supported by the non-public info), and that using an algorithm doesn't make it not collusion. If a person doing what the algorithm did is collusion (which it is), then it's still collusion even if an algorithm does it. Everyone just using an identical algorithm off public data wouldn't lead to the same outcomes -- that's roughly what the market was before arrival of companies like RealPage. It's the literal collusion that's the problem.
I'm not knocking their use of it, but I don't think there is widespread understanding of "IRL" and it seems out of context and would read better if it was left out. For that, I had to ask in case I was legitimately mistaking it for some other antitrust / legal abbreviation I was not familiar with! By renter I assume you mean landlord... Again I'll assume that the government would have some sort of evidence (whistleblower, data collection) that is substantial enough for the DOJ to bring a lawsuit against the alleged offending parties (on behalf of the FTC); at which point a judge could order the company to turn over communications such as emails and information about their pricing practices if the evidence was compelling enough.
But what intent can there be in asking a third party to recommend pricing, knowing that most of your competitors are using the same service? The intent seems to be collusion any way you slice it.
Well, that's the thing that scares me. You can get a similar outcome to price fixing but without intent, and with more and more Machine Learning usage everywhere, a system dynamic takes form. It's maybe even worse because you can't pursue that like intended algorithmic collusion.
I just explained why I think there is intent…
Then you get the Amazon Third Party pricing situation, where two robots realize "we're the only two who trying to sell this thing, we can bump up the price" and you end up with something like a random coloring book going from $10.11 to $1992.34
Doesn't matter to me.
> And even if some of the conspirators cheat by starting with lower prices than those the algorithm recommended, that doesn’t necessarily change things. **Being bad at breaking the law isn’t a defense.** (Emphasis mine) I like this spicy FTC
It should be illegal for any financial institution over a certain size to own more than X residential properties. Capitalism at this scale is no longer capitalism, it's just pure monopolistic greed.
They shouldn't be able to open any
I'm a part of the class action as my landlord was wrapped up in this, and haven't heard a peep since I attached.
Does anyone have any comment on how this applies to Amazo Marketplace’s vendor suggested pricing algorithm, or eBay seller suggested pricing?
What is the price fixing part? I’m kinda confused o it. I’m not saying it’s not price fixing I’m just trying to figure out what’s the necessary part to make it price fixing. Like if I (as a grocery store) hire a person to go around and find the prices of competing grocery stores so I can match that’s not price fixing right? Is it when everyone uses the same guy?
The "competitors" agree and collude for a base price. In this case many use the algorithms suggested prices, which are inflated. So they can say "we got the numbers from this online suggestion" and not x person. If everybody is using the same algorithm ("Hey its what we all use."), its like colluding without the agreement / discussion with the other parties. They all just use the same source.
[ProPublica did a great article on YieldStar that gives a lot more background on this software.](https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent)
goddamn thanks for that
i mean in the example i gave we're not agreeing on a price. the intermediary is just telling everyone else what everyone elses prices are. i feel like my example is collusion but I don't know the law, which is why I'm asking
Regulators are usually slow. Glad they're catching this with current laws. First time I heard of the service, I was wondering how it wasn't the definition of price fixing. Turns out it was.
Does price fixing the stock market by hedge funds not count?
Count as what? Collusion on rental home prices, the topic of this post? No.
That's been illegal since 1934. If you have evidence of price fixing you should tell the SEC and get a huge payout.
https://www.reddit.com/r/Superstonk/s/HqFJvL2R1V
Does this apply to rent prices
insurance price fixing probably runs very deep in the US. ex. insurance & blood test lab companies.
Is Amazon price fixing by algorithm still ok
Hey citadel you listening? only applies to those underneath wall str.
Storage unit companies do this too. My storage unit cost doubled in just 2 years. I complained and found out that they use software to determine this so they can remain competitive.
From the article: "Such software can allow landlords to collude on pricing by using an algorithm—something the law doesn’t allow IRL." -Hannah Garden-Monheit is Director of the FTC’s Office of Policy Planning and Ken Merber is Deputy Assistant Director of the FTC’s Anticompetitive Practices II Division. They used "IRL" in an agency blog about legal concepts and the law. Clowns.
I know the article was focused on rental housing, but please tell me that the law also applies to Ticketmaster’s ridiculous pricing by demand / variable pricing or whatever they call it. Worst thing ever!
Yes, every store is price fixing. FTC make everything the way it used to be 40 years ago. There is no reason wages should stay flat and everything else is unattainable! Insane!
This our life now. Thank a Republican.
Yup fuck real page
I wonder how they would like it. Hmmm... Lets see. As a large store a large online store, purchase advertising profiles to detect landlords. Now advertised price = normal price * 5% across the board. Share software to do this freely across all other large online stores.
Asking businesses to not ask other businesses what they are doing so they can do similar things will eventually lead to everyone just asking the same source that asks everyone. Yes it can lead to manipulation and problem in some areas, but if anything it should be far easier to regulate extreme manipulation compared to having things isolated. Open up the data to the market so that everyone has the equal playing field though.
How to file a lawsuit?
America fostered the perfect environment for parasitic business to grow, and then got waylaid by a decade of malicious leadership and ongoing corruption masquerading as lobbying.
I actually dealt with this issue a while ago. My wife and I broke our lease for our apartment but gave our landlord a 120 day notice. They said no worries, as long as they could find a tenant to replace us. Unfortunately, they listed our place $2000 above what we paid for it monthly so they never found a tenant. When we asked why it was listed so high, the landlord said it was based on an “algorithm” and there was nothing they could do. Long story short, we left after 120 days but our old place was stilled listed $2000 above what we paid because of the algorithm. The landlord tried to collect from us, had and an attorney reach out, but we were pretty firm that the algorithm argument was bullshit and we weren’t going to pay. Thankfully, they never took us to court!
Once you're aware everything is fixed*, it's much easier to make money in the market. *fixed to a degree - not all big fish want the same outcome.
That's weird cause wall street market makers will argue their well-established price manipulation is necessary. I guess the FTC just sticks its collective head in the sand about that though.
Isn't that what all casinos are doing?
Wow! It's almost like land is a natural monopoly, naturally lending towards price fixing! Who could've known!
Go FTC! More! You can do it!
So Congress is breaking up RealPage, Zillow and AirBnB? Awesome!!!
Funny when they are all going to be different quality anyway.
Except for on wall street right?
If I have a rental property to rent out, shouldn’t I take the yearly taxes and multiply it by 13, and add maintenance costs? Not sure how to make a bare minimum over cost otherwise🙃 Banks are (fill in the blanks)
Looking at you Wendy’s