[SoDu Reading Room] Can AI Get Away with Price Fixing?

In the latest SoDu Reading Room installment, we check out an article in The Atlantic written by Roge Karma that explores concerns about RealPage, a service powered by artificial intelligence that could lead to AI price fixing – and possibly untouchable by laws that apply to humans engaging in the same practice.

Here are five takeaways from the piece:

1. AI Price-Fixing Concerns: RealPage, a company that helps landlords set rents using AI algorithms, is accused of facilitating price-fixing, leading to coordinated rent hikes across housing markets. Critics argue this technology creates effects similar to traditional price-fixing cartels, potentially worsening the housing affordability crisis.
2. Legal Challenges: Numerous lawsuits against RealPage claim that its software pressures landlords into following its pricing recommendations, undermining competition. These suits suggest that RealPage’s clients act more like collaborators than competitors, raising serious antitrust concerns.
3. Broader Implications: The RealPage case highlights a growing issue with algorithmic price-fixing, which is spreading to various industries. Existing antitrust laws may not be adequate to address this new form of collusion, as proving explicit agreements between companies is challenging.
4. Algorithmic Collusion: Studies suggest that even when companies use different algorithms, these systems can learn to collude, leading to higher prices without direct human intervention. This raises the risk of widespread, undetected price-fixing across markets.
5. Legislative Action: In response to these concerns, some lawmakers and local governments are pushing for new regulations. San Francisco recently passed a law banning software that uses non-public data to set rents, and similar measures are being considered elsewhere.

Do you live in a Durham apartment complex that uses RealPage? What impacts have you seen on rent prices?