The Justice Department and the Attorneys General of eight states in the US on Friday filed a civil antitrust complaint against real estate service firm RealPage for providing landlords with software that maximizes rent at the expense of renters.
That lawsuit [PDF] claims RealPage has unlawfully limited competition among landlords through its revenue management software.
"RealPage sells software to landlords that collects nonpublic information from competing landlords and uses that combined information to make pricing recommendations," the complaint says. "... RealPage replaces competition with coordination. It substitutes unity for rivalry. It subverts competition and the competitive process. It does so openly and directly – and American renters are left paying the price."
It subverts competition ... It does so openly and directly – and American renters are left paying the price
A 2023 analysis of the impact of algorithmic pricing on the US multifamily rental market found that software-based rental pricing coordination "results in an average markup increase of $25 per unit per month, impacting about 4.2 million units nationwide."
"Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law," said US Attorney General Merrick Garland, in a statement. "We allege that RealPage's pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents."
The Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington are participating in the lawsuit against Texas-based RealPage.
The Justice Department and the Federal Trade Commision began probing RealPage two years ago at the behest of concerned lawmakers. The inquiry followed a private lawsuit against the company that alleged RealPage functioned as a cartel to drive up rent prices for the benefit of landlords.
Earlier this month, the San Francisco Board of Supervisors voted to ban algorithmic price setting in the rental housing market, based on concerns about real estate management software from companies like RealPage and Yardi. Final approval for the ban is scheduled to be decided next month.
- San Francisco set to ban rent-hiking algorithms used by landlords
- US Justice Dept reportedly checking AI rent-pricing biz RealPage
- Watchdog urged to sniff out any collusion, deception in rent-setting algorithms
- Rent-calculating software biz accused of colluding with 'cartel' of landlords
The Open Markets Institute, a progressive advocacy organization, voiced support for the government's lawsuit.
"Affordable housing is a fundamental human right," the group said in a statement to The Register. "But in city after city across the country, more and more people are finding it difficult to keep roofs over their heads as rental prices for apartments have skyrocketed. One reason rents are increasing is because landlords are colluding to raise prices by using software developed by RealPage."
RealPage offered the opposite take.
A distraction from the fundamental economic and political issues driving inflation throughout our economy
"We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DoJ [Dept of Justice] has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years," said Jennifer Bowcock, senior vice president of communications and creative at RealPage, in a statement to The Register.
"It is merely a distraction from the fundamental economic and political issues driving inflation throughout our economy – and housing affordability in particular – which should be the focus of policymakers in Washington, DC.
Bowcock said RealPage's revenue management software was designed to be legally compliant and cited the DoJ's 2017 antitrust clearance of the vendor's acquisition of Lease Rent Options (LRO) and its analysis of company software as evidence that RealPage's practices have been deemed acceptable – at least to the Trump administration.
"We believe the claims brought by the DoJ are devoid of merit and will do nothing to make housing more affordable," said Bowcock. "We intend to vigorously defend ourselves against these accusations." ®