RealPage is a huge Richardson-based company that helps property owners set rents using an algorithm whose inputs are rents charged by other property owners. The company has about 31,700 customers that together control a huge chunk of the rentable space in the United States. And that could be a problem. A lengthy new ProPublica investigation took a look at what happens when a critical mass of property owners all put their data into the same bucket: rents go up.
A few points in the story jumped out at me. First, the main architect of RealPage’s software pulled essentially the same trick back in the ’80s with the airline industry. From ProPublica: “Competing airlines began using common software to share planned routes and prices with each other before they became public. The technology helped head off price wars that would have lowered ticket prices, the Department of Justice said. The department said the arrangement may have artificially inflated airfares, estimating the cost to consumers at more than a billion dollars between 1988 and 1992. The government eventually reached settlements or consent decrees for price fixing with eight airlines … .”
Second, beyond the sharing of pricing data, RealPage fosters cooperation among property owners. From ProPublica: “The RealPage User Group—the forum for apartment managers who use the company’s products—encourages rivals to work together, something that has been challenged as anti-competitive in antitrust prosecutions, too. The company’s website says the group aims to ‘promote communications between users,’ among other things.”
Finally, there is a quote from Maureen K. Ohlhausen. From ProPublica: “[T]he acting chair of the FederalTrade 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.’”
As I say, it’s a lengthy report, running to more than 5,000 words. You should read the whole thing when you have the time.
Now let’s take a look at how the Morning News handled this important national story that sprang out of its own backyard. They used their tired “5 things to know” formula to chop it up into an 800-word piece that, rather oddly, winds up feeling like a positive story about RealPage. The headline: “5 Things to Know About RealPage, the Richardson Firm Helping Landlords Raise Rents.” The company is helping landlords. And then the subhead: “The North Texas property management-tech giant has a presence across 22 million apartment units around the world.”
RealPage has to be stoked about the treatment the News gave the story. It reads like an ad for the company’s services. Instead of explaining how RealPage might be breaking the law to screw renters, here are the five things the paper thinks you need to know:
“Founder Steve Winn has become a billionaire and political donor”
“One of the world’s largest private equity firms bought RealPage in 2021”
“RealPage moved from Carrollton to Richardson in 2016”
“The company grew through dozens of acquisitions”
“Founder is involved in Wells Fargo’s big project in Irving”
What the hell is happening at the Dallas Morning News? This is offensively gross.
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