Anyone who has rented an apartment in the U.S. in recent years may have felt like the game was rigged: Prices are rising not just in your building, but in other buildings around town, seemingly in lockstep. A new civil lawsuit filed today by the U.S. Department of Justice claims that in many cases, this isn’t just happening in your head, but that a single company’s algorithm is to blame.
That company is RealPage, a Texas-based company that provides commercial revenue management software for landlords. In other words, it helps set the prices of apartments. But it does so, the Justice Department alleges in its lawsuit, by effectively helping its customers cheat: landlords enter rental prices and contract terms into the system, and in return, RealPage’s algorithm spits out a suggested price that allows for voting and stifles competition.
“By feeding sensitive data into a sophisticated artificial intelligence-based algorithm, RealPage has found a modern way to violate a centuries-old law by systematically coordinating rental housing prices,” Assistant Attorney General Lisa Monaco said in a statement.
RealPage has a lot of influence. The company controls 80 percent of the market for software of this kind, which in turn is used to set prices for roughly three million units across the country, according to the Justice Department. The company already faces several lawsuits, including one from the state of Arizona and another from Washington, DC, where RealPage software is allegedly used to price more than 90 percent of units in large multifamily buildings. RealPage’s algorithmic pricing first attracted wider attention when a 2022 ProPublica investigation revealed how the company’s YieldStar software works.
The Justice Department’s civil action, joined by the attorneys general of eight states, represents a significant escalation of legal action against the company. It is also a first for the Justice Department, according to officials who spoke on background during a conference call to discuss the complaint. While the government had previously filed criminal charges against an Amazon seller for algorithm-based price fixing, this is the first civil action in which the algorithm itself was actually the vehicle of infringement, according to the Justice Department official.
The complaint itself quotes RealPage executives as acknowledging anti-competitive aspects of their product. “It’s better for everyone to succeed than for us to try to essentially compete with each other in a way that puts the entire industry under pressure,” a RealPage executive reportedly wrote.
RealPage has repeatedly denied any allegations of antitrust violations, even going so far as to publish a six-page digital brochure purporting to tell “the real story” about its products, along with a detailed FAQ page on a dedicated public policy website. “Attacks on the industry’s revenue management are based on demonstrably false information,” a section of that website states. “RealPage’s revenue management software benefits both housing providers and residents.”
This is a developing story, please check back later for updates.
