Landlord giant raided by FBI for algorithmic price fixing

Originally published at: https://boingboing.net/2024/06/11/landlord-giant-raided-by-fbi-for-algorithmic-price-fixing.html

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Good! Fuck them. I would be so fucked right now if I didn’t have my currently living situation that makes it half way affordable.

GIF by Matthew Henry

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I’m so glad my landlord is an actual person who I know and can talk to and even lives directly across the street from me… rather than a faceless corporation.

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For anyone who doesn’t want to click through…

This action is part of a criminal antitrust investigation by the U.S. Department of Justice (DOJ) into allegations that Cortland has been involved in a conspiracy to artificially inflate apartment rents.

The DOJ’s investigation isn’t limited to Cortland and RealPage. It has expanded to include dozens of property owners and managers across the country. The investigation has escalated from a civil matter to a criminal probe, reflecting the seriousness of the allegations. The DOJ and Federal Trade Commission are key players in this crackdown on anti-competitive behavior.

and…

RealPage and its clients are already facing multiple lawsuits. A class-action lawsuit by renters, as well as lawsuits by attorneys general in Washington, D.C., Arizona, and North Carolina, allege that RealPage and its clients conspired to limit the supply of rental units and raise prices.

This is a big deal. This is another area where the Biden Administration should be getting praise. There is an effort to actually enforce antitrust laws for the first time in decades.

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Another nice thing we have in Canada, but Yoy probably considers it communism, is that we have provincial Rental Boards and year-over-year renewal increases are capped somewhere between 2%-5%, depending on which province. My units current rent is $940 but if i leave and it goes to market then they’ll ask for $1750 (it’s a 1BR semi-basement that hasn’t had work on it in a decade…)

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There’s nothing illegal about using public market data and algorithmic analysis to set availability and pricing of your real estate portfolio, just like every other industry. Airlines, big hotel companies, retailers, etc. all have massive resources devoted to figuring out how to price things to make the most money.

But antitrust law forbids conspiring with competitors to fix prices, and the RealPage software may cross that line.

Most pricing software uses a mix of a company’s internal data together with publicly available data to make recommendations for that company. But RealPage uses internal proprietary data from multiple clients (data that those clients wouldn’t normally share with competitors) to make its recommendations. I believe there are also adverse consequences for clients that reject the recommendations too often. All of which starts to look a lot like the classic “trusts” that the antitrust laws were designed to break up.

It’s the difference between picking up the newspaper and seeing that your biggest competitor has raised asking rents, and thinking “gee I should raise rents too” (legal) vs. calling your competitor and saying “hey let’s both raise rents and promise each other not to accept less than X” (not legal).

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Fingers crossed that this spills over into lowering the rent from my giant corp-real-estate-owned complex.

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More like: “How about we just agree to pay this third guy to look at all of our books at once and tell us who’s too low.”
It’s not conspiracy if you get a third party to do it? :face_with_peeking_eye:

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This exactly. They used RealPage to outsource their criminal collusion.

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