#556
Real Pricing?
Published:
Sep 07, 2024
Author:
Sarah Parsons Wolter
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Soaring rents have been squeezing renters nationwide, rising over 25% since the pandemic began—especially in fast-growing cities like Miami and Phoenix. As Americans struggle to afford housing, the US Department of Justice is stepping in, accusing RealPage, a property management software, of enabling price-fixing among landlords through its AI-driven pricing tools.
The DOJ claims that RealPage's algorithm, by gathering confidential data from landlords, allows for coordinated rent hikes, undermining competition and harming millions of renters. The machine learning system evaluates competitors' data and suggests prices based on that input, which the DOJ claims restricts independent price competition—effectively turning private data sharing into a tool for illegal coordination.
RealPage, however, defends its software as a tool for market efficiency, not collusion. The company asserts that customers maintain full control over their rent pricing decisions, with 100% discretion to accept or reject the software’s recommendations. RealPage further argues that its software makes price suggestions in all directions—whether up, down, or unchanged. They contend that many industries use similar technologies to adjust prices dynamically, based on supply and demand as well as market trends.
In an age where AI and real-time data are shaping nearly every industry, pricing decisions have become more dynamic than ever. This trend extends beyond rent; even something as seemingly trivial as the cost of a cocktail, or as we wrote about previously, the cost of a cheeseburger (Fast Food to Fintech). As we prepare for the US Open final this Sunday, we wonder how many Honey Deuce cocktails will be sold. The price of this iconic drink has outpaced inflation in recent years, prompting many to ask: who truly sets the cost and what could happen if AI begins to dictate pricing based on real-time consumer data?
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Real Pricing?
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