Algorithms Can Aid Price Collusion, Even If No Humans Actually Talk To Each Other, US Enforcers Say (theverge.com) 67
Algorithms might help hotels illegally collude on prices, even if no humans from those businesses actually talk to each other about them, according to US antitrust enforcers. From a report: The Department of Justice and Federal Trade Commission jointly submitted a statement of interest in Cornish-Adebiyi v. Caesars Entertainment, a case brought before the US District Court of New Jersey. The class action case was brought by New Jersey residents who rented rooms in Atlantic City hotels and alleged that several of those hotels engaged in an illegal price-fixing conspiracy through the use of a common pricing algorithm.
The plaintiffs are trying to show that the hotels violated Section 1 of the Sherman Act, which prohibits "conspiracy in restraint of trade" and is used to prosecute illegal price-fixing. They say that the hotels allegedly used a pricing algorithm platform called Rainmaker, knowing that their competitors were also using the platform and choosing it for that reason. The agencies really care about how this issue is handled. "Judicial treatment of the use of algorithms in price fixing has tremendous practical importance," the DOJ and FTC write in their statement.
The plaintiffs are trying to show that the hotels violated Section 1 of the Sherman Act, which prohibits "conspiracy in restraint of trade" and is used to prosecute illegal price-fixing. They say that the hotels allegedly used a pricing algorithm platform called Rainmaker, knowing that their competitors were also using the platform and choosing it for that reason. The agencies really care about how this issue is handled. "Judicial treatment of the use of algorithms in price fixing has tremendous practical importance," the DOJ and FTC write in their statement.
Business collusion bad, unions good? (Score:1, Troll)
How does that work? Note, I am opposed to collusion in BOTH cases, so see if you can incorporate that in your rational argument.
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Well, that's a take. An incredibly stupid take, but a take nonetheless.
Businesses ARE collusion. We're not talking about a single employee negotiating with a single person employing them. We're talking about MASSIVE corporations, a single employee has no chance having a meaningful negotiation with that. Unions are the only thing that puts humans on a remotely close to even playing field.
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One union is the equivalent of one company. Legally, one company cannot collude with itself, and neither can one union. Multiple unions can, indeed, collude with each other.
And yes, there are huge mega-unions that interact with many companies, but there are also mega-corporations that control many businesses.
In the end, the desire is balance between labor and management, and unions were (and are becoming again) an important tool to achieve that. (And like any tool, it can be misused.)
Re: Business collusion bad, unions good? (Score:1)
Unions practically speaking perform insider trading and then have their companies protected by government (aka monopolies) which force the companies they just extracted the information from to a mock negotiation table. Not only that, they then demand protection money from the workers and start colluding with the companies against the workers for profit.
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Re: Business collusion bad, unions good? (Score:1)
In a union job you cannot individually negotiate for higher wages. Usually raises are based on seniority and a measure of collective productivity (it is basically communism at the company level). What is worse, you cannot negotiate with your employer even if you do not want to be in the union, it is legally prohibited, so the union has a legal monopoly on raises and will keep rates low as long as the employers donate to their political candidates.
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Want to bet? My father worked in a union industry and once he'd established himself he never worked for union scale. Of course, he was very good at what he did and never had to worry about layoffs or other job interruptions except, of course, for strikes. If you're good enough you can negotiate, but you have to be very very good.
Re: Business collusion bad, unions good? (Score:1)
It is illegal for an employer to offer better wages to non union workers for the unionized jobs.
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I don’t think you know what negotiations mean. The unions set a band of wages the employer cannot change, they may give the illusion to the worker that you can negotiate, but you must stay within said band or else the employer will be convicted of trying to undermine the union. If your dad was a good worker (no doubt he was) then he could’ve made even more money negotiating a private non-union job if unions did not have such tremendous legal monopoly powers.
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Pretty simple: One is about sabotaging the market, the other is about setting minimal standards for a society. Sure, it depends on the intensity, and there are groups of "workers" that are just as guilty of market sabotage, for example lawyers. But when you are in middle or lower income fields, that is not the case.
I do suspect you are asking in bad faith though and do not really care for an answer.
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I suspect that he's either about 18, or has never had to find a job in a tight market. (I've know some farmers and small businessmen who honestly held his opinion. Admittedly that was a few decades ago.)
Re:Business collusion bad, unions good? (Score:5, Insightful)
It's the balance of power. Employers have huge power over employees because everyone needs money to survive, and in the US also healthcare insurance. So unions balance things out a bit.
In this case the websites are already in a strong position, like most retailers. Also in capitalism, collusion is bad because it prevents competition from working as expected.
Re: Business collusion bad, unions good? (Score:1)
And I have the power to leave thereby taking my productivity and talent. Perhaps people like you that being nothing to the table like to unionize because it rewards mediocrity.
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There's a weird idea going around that being in a union means you can't negotiate a high salary, or increases.
The union is there to set a baseline, not a ceiling.
Re: Business collusion bad, unions good? (Score:1)
Bzzt, wrong. Unions negotiate your wages and set the scales. It is illegal for a company to offer higher wages to non union jobs where the union has negotiated.
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It's that some American thing? Here you can be on the union negotiated scales, but it's not obligatory. Typically they union negotiates it was the minimum, not the maximum.
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The price is chosen freely by the businesses and imposed onto consumers. The way consumers have to punish bad practices is to choose another brand next time. This regulation mechanism is exactly what price fixing prevents and why it is illegal (and agreeing -- colluding onto price fixing is illegal as well).
Salaries are chosen freely by the employers and imposed onto choice-less employees. Workers don't have the freedom to work for another employer of their choosing (like a consumer chooses another brand of
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Legally there is no such thing as "collusion" without people in a room talking to each other, because there is literally no "intent". They are trying to claim that creation of a market itself, whereby individual actors can see supply and demand, and act according to that market somehow constitutes "collusion".
Re: Business collusion bad, unions good? (Score:2)
Re: Business collusion bad, unions good? (Score:1)
Who is this mystical third party and where is their price list? The algorithm finds the best price for every time and market, if there is not enough supply, prices go up, if there is too much prices go down. The only thing that changed is that it is no longer done by a human so huge price cuts and special deals and coupons and other marketing tricks to lure people to any specific vendor are no longer necessary, the market settles around an equilibrium until something disturbs that. That is not collusion, th
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Who is this mystical third party and where is their price list?
Here's a good, recent example for you: "14 Big Landlords Used Software To Collude on Rent Prices says DC Lawsuit" [slashdot.org]
Re: Business collusion bad, unions good? (Score:1)
Yes, that is a similar allegation (free market algorithms are not collusion, they just stabilize the market), not proof. Where is the price list, because there is incentive to stay just under the price, attract more people than your co-conspirators that way and then the whole structure breaks down. Collusion is just not profitable at scale.
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Legally there is no such thing as "collusion" without people in a room talking to each other
Not so! The Apple eBooks case from a decade ago is a great example of this.
Apple's agreement with the publishers had two important conditions:
1. An agency model that allowed publishers to set their own prices while Apple took a percentage cut.
2. A Most Favored Nation (MFN) clause that ensured Apple's store would always have the cheapest price for any given book.
The combination of those two factors ensured that prices would go up industry-wide because Amazon, who wasn't part of this, was still operating on a
Re: Business collusion bad, unions good? (Score:1)
So why couldnâ(TM)t Amazon have provided better deals to publishers and nobody wouldâ(TM)ve used Apple eBooks?
Just because you lower your prices to be in a specific market does not mean any collusion happened. Books have become much cheaper through Apple and Amazon than the classic book store.
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So why couldnâ(TM)t Amazon have provided better deals to publishers and nobody wouldâ(TM)ve used Apple eBooks?
That’s basically what happened, but it still resulted in prices going up due to the MFN clause. Amazon switched to an agency model and took a smaller cut, but consumers continued seeing the same prices at both stores, regardless of Amazon’s cut vs. Apple’s cut, so prices rose to ensure profitability at the store that took the largest cut: Apple’s. And publishers benefitted from increased profits at Amazon.
Just because you lower your prices to be in a specific market does
I have no idea what you’re referring to. Everything I’m talking abo
Attorney: tacit collusion (Score:2)
I am an attorney, but this isn't legal advice. If you have any actual use for legal advice on the subject, you certainly have the resources to pay a retainer!
>Legally there is no such thing as "collusion" without people in a
>room talking to each other, because there is literally no "intent".
Just where did you get the notion? Certainly not from studying antitrust law!
Tacit collusion has *long* been recognized.
It is indeed very had to prove, but it is hardly a new concept.
For those *wanting* to collu
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Collusion isn't a synonym of "cooperation" that has a negative connotation. It means something entirely different that is in no way applicable to the activities of (lawful) unions.
collusion /k-loozhn/
noun
1. An often secret action taken by two or more parties to achieve an illegal or improper purpose.
2. An agreement between two or more persons to defraud a person of his rights, by the forms of law, or to obtain an object forbidden by law.
As a general rule, you have the freedom to do pretty much anything you want to do with other people (see: Freedom of Association), so whether you want to work together with fellow employees at a business to outcompete others in the market, work together with fellow volunteers to feed the hungry, or work together with fellow union
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A business always colludes with itself when it hires its employees, and bargains as the whole collective of the whole business. Seems kind of like a union, but with more money.
How is large business vs. individual equal? (Score:2)
I agree if we had lots of small companies all interacting we might want to limit union power, but isn't a business a set of people all colluding for a shared purpose?
How can forcing individuals to negotiate with groups ever going to be fair? It's like taking a pro sports player and pitting them against casual players. The business has a specialist in each area who only does what most people rarely do (like negotiate employment terms).
Now do I think unions should be able to do anything they want? No.
But d
rent (Score:5, Insightful)
Now do Landlords and Rent.
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That's actually what kicked all this off AFAIK.
https://www.npr.org/transcript... [npr.org]
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But we fix hotel pricing instead? Great.
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??? Per the linked source, those lawsuits for housing rental costs are currently in progress. We can go after both at the same time, which is what is happening.
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In tournament poker in a 3-way hand, when one player is all in, it is common practice for the other two hands to then check it down, making sure that both of their hands have a chance to beat the all-in player knocking them out of the tournament...
Nobody agreed to this before-hand. The collusion is emergent.
Effectively this is about rent. (Score:2)
Just very short term, but hopefully it spills over...
Though I don't think they can solve housing without dealing with giant for profit real estate companies. Was it "Blackstone" that was buying up tons of stuff in the same market, then driving the prices up? Which of course impacts rents in the area too.
Seems like we could model how much competition is needed for a fair and efficient market. Of course that would eat into the power of many important people. Can't get political donations as easily.
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DC's attorney general has sued 14 of the city's largest landlord firms, claiming they entered into agreements with a property management software firm to keep rent prices high in a city with a housing affordability crisis. From a report: The complaint, filed earlier today by Attorney General Brian Schwalb, focuses on the multifamily landlords' use of software from Texas-based firm RealPage, which suggests rental prices based on a pricing algorithm.
Oldie but goodie (Score:2)
collusion solution (Score:2)
Collusion without colluding. Right.
Re: collusion solution (Score:2)
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We need a better word than colluding to describe what happened, which is still undesirable for the consumer point of view. The two hotel chains used exactly the same price models (unknowingly), resulting in identical prices. A solution is the company selling the algorithm service provides the algorithm exposing some parameters, coming with initial values semi-randomized within an acceptable range, and open for tuning by each customer.
Capitalists hate competition (Score:5, Interesting)
The natural course of capitalist organizations is to merge together, collude and fix prices once they have enough "market power".
We are in late stage capitalism now where just about everything we buy is sold by some mega corporation which doesn't have any effective competition.
That's why we have "greedflation" raising prices and increasing corporate profits as a result of decades of lax anti-trust enforcement.
Re:Capitalists hate competition (Score:5, Insightful)
Well, yes. On of the core drives of capitalism is to end capitalism and not have an actual market anymore, but a fake market were on or a small number of players control the supply.
I often wonder whether the greed displayed is really a form of mental disease and insanity. Because other than being the richest asshole around, there is really nothing to be gained. I do not understand how that can ever be desirable to a sane person.
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There are a lot of psychopaths who are happy just to accumulate money and buy "friends".
They love being the "richest asshole around". They run our economy.
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The myth is that we need psychopathic assholes to have a good economy.
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Yes, we need these "job creators". /s
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There are a lot of psychopaths who are happy just to accumulate money and buy "friends". They love being the "richest asshole around". They run our economy.
They are not called "psychopaths" in "polite company".
They are called politicians or elected government officials.
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The politicians are just the pawns of the rich. Politicians are bribed by the rich to pass laws in their favor.
Many politicians also become rich by passing laws to help themselves.
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It started in earnest with Ronald Reagan who ordered the Justice Department to halt enforcement of the Sherman Antitrust Act in 1983
Re: Capitalists hate competition (Score:2)
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Disconnect on that level is a severe mental illness.
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Except me earning the "honor" of entering my initials on a high score roster of a game doesn't harm others around the world. The people wanting to add another $100 million to their high score often do.
Nobody ever had to choose between food, shelter, or medical care because of me getting a high score in a video game.
What if we could test "empathy"? (Score:2)
And "treated" people who lacked it, who had too much power.
My best guess is we medicate away any empathy (coffee, alcohol, etc), and reward the people who do that best. Rinse repeat.
That and effective measures of most people's lives. We can make up (or believe) many things if we want to. "I got what I have because I deserve it, and so do they." (when looking at someone in a bad situation versus yours)
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I often wonder whether the greed displayed is really a form of mental disease and insanity.
Look within yourself. We all have the same capabilities. In fact, it is very easy to behave like them. It is the default if that is the environment you are raised in. In fact, you WILL likely act like them if you do not look within yourself.
Duh (Score:2)
Seriously, does not body talk to actual experts anymore? It really does not get much more obvious than this. Cretins with delusions all around, it seems.
Vacancies go up so rents go up ... (Score:2)
Or if you are one of those anti-capitalist communists you might say this is evidence of collusion even if the people colluding never talked to each other. (Ignoring for the moment that they all happened to share their proprietary business information with a 3rd party that they paid to help them choose optimal rents).
Not enough that multiple clients use Rainmaker (Score:2)
The question is, does Rainmaker use data from Customer A as part of the algorithm for Customer B?
If they do, then yes, that's arguably collusion. If the data is kept separate, then it would be hard to prove.
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I don't think the sharing customer information is necessarily required.
For a simple algorithm: inputs -> algorithm -> outputs
If everyone is using the same algorithm, and the algorithm is fed the same set of inputs then everyone will get the same output.
That has the practical effect of aligning everyone's price and removing real competition from the market.
The legalities seem far messier. Directly cooperating to set prices is clearly collusion. The DOJ seems to be arguing that cooperating to use the sa
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Algorithms are never just "stock." They are always tweaked for the specific use cases of each customer. For example, even in the same hotel chain, different properties will have different room rates, depending on the location, proximity to popular destinations, and so on. So the "same" algorithm will take into account different factors, and spit out different outcomes, even within the same hotel chain at a single customer. And these software providers don't just offer a single algorithm. These algorithms ar
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I disagree. It just needs to be using an identical baseline price for all clients. While it probably would include competitive market data, that isn't actually required to induce a price-fixed outcome.
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It just needs to be using an identical baseline price for all clients
And that is something it certainly would not have. Those "baselines" would be different for each hotel company, as specified by business stakeholders from each of those hotel companies. Those hotel chains are *not* going to the vendor saying "We have no idea what we want to charge, would you just tell us, and we'll do what you say!" Not even close.
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If they all use Rainmaker, then Rainmaker becomes a monopolist since it alone sets the prices everywhere.
Easy to see how that works (Score:1)
I used to work for a Web hosting company which had a rather shady manager, who would regularly check the prices on their competitors and adjust their own prices to be right between the top two cheapest providers — no regard for the company’s actual costs or quality of service. It was a brain-dead simple algorithm, and no actual (intentional) collusion involved.
I wonder if this same logic applies to trades. (Score:2)
Many trades contractors (plumbers, electricians, etc) use flat rate price books now. Would those be illegal for the same reason?