Texas-based RealPage’s YieldStar software helps landlords set prices for apartments across the U.S. With rents soaring, critics are concerned that the company’s proprietary algorithm is hurting competition.

“Never before have we seen these numbers,” said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company’s services. Turning to his colleague, Parsons asked: What role had the software played?

“I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.”

The celebratory remarks were more than swagger. For years, RealPage has sold software that uses data analytics to suggest daily prices for open units. Property managers across the United States have gushed about how the company’s algorithm boosts profits.

“The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it,” said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage’s software in a testimonial video on the company’s website.

  • Wertheimer [any]
    ·
    2 years ago

    But Maureen K. Ohlhausen, who was then the acting chair of the Federal Trade Commission, said in a 2017 talk that it could be problematic if a group of competitors all used the same outside firm’s algorithm to maximize prices across a market.

    She suggested substituting “a guy named Bob” everywhere the word algorithm appears.

    “Is it OK for a guy named Bob to collect confidential price strategy information from all the participants in a market and then tell everybody how they should price?” she said. “If it isn’t OK for a guy named Bob to do it, then it probably isn’t OK for an algorithm to do it either.”

    Through a representative, Ohlhausen declined to comment on RealPage.

    • The_Walkening [none/use name]
      ·
      2 years ago

      Great to hear such opposition to an idea from someone who would have been able to do something about it but didn't.

      • Wertheimer [any]
        ·
        2 years ago

        Trump named her acting chairperson, but it will not surprise anyone here to learn that she first joined the FTC under Obama.

    • Frank [he/him, he/him]
      ·
      2 years ago

      I mean they're literally just forming a cartel with a level or two of obfuscation.