[salmonellaeater]

This is a bad article. There are two issues that are being conflated: collusion, and algorithmic pricing. On top of this, the author is either ignorant of economic principles, or is deliberately avoiding using economic analysis.

Collusion is already illegal. If RealPage is facilitating collusion, then they and the participating landlords should be prosecuted. RealPage seems to be in a strange and novel business where they're recommending prices that might not be the best for their customers, the landlords. This seems a lot like collusion with extra steps. If they're actually recommending prices that maximize profits for each customer individually then that seems fine.

A quote from the article suggests that RealPage is being used in real estate companies by upper managers to guide and oversee the work of their reports:

> If a property manager disagrees with the price the algorithm suggests and wants to decrease rent rather than increase it, a pricing advisor will “escalate the dispute to the manager’s superior,” prosecutors allege in the suit.

This... is fine as long as the price being recommended is in the best interest of the real estate company rather than RealPage.

Algorithmic pricing is a perfectly normal extension of basic business management. A real estate management company could achieve the same thing that RealPage is doing (aside from collusion) by buying data from other companies and using some fancy math to choose the best rental prices.

The article makes a claim that isn't really substantiated:

> The complaint names specific areas where rents are artificially high.

> In the second quarter of 2020, the average rent in San Diego County was $1,926, reflecting a 26% increase over three years, according to the San Diego Union-Tribune. Rents have since risen even more in the city of San Diego, to $2,336 per month as of November 2024 – up 21% from 2020, according to RentCafe and the Tribune. That’s 50% higher than the national average rent.

This is a non sequitur. How San Diego rents compare to the national average doesn't tell you anything about whether rents are artificially high. San Diego is a desirable place to live; maybe the rents are artificially low and really should be 2x the national average! What would tell you that is whether landlords could make more money by lowering rents. This would only make sense if occupancy rates are low and landlords could fill more empty units by lowering rents. It wouldn't necessarily make sense even if occupancy rates are low, as high prices filter out bad tenants who cause damage and other costs and can't compensate the landlord because they don't have money. In some markets filtering out these bad tenants can be worth it even if units go empty. California has really poor protections for landlords against bad tenants, so I wouldn't be surprised if higher prices and lower occupancy rates was the correct business decision for landlords there.