The US Department of Justice has filed an antitrust lawsuit against real estate software company RealPage, accusing the company of using its algorithm to facilitate collusion between landlords to artificially inflate rents across the country.
The lawsuit, supported by North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington, alleges that millions of renters have been affected by the alleged price manipulation.
According to the New York Times, RealPage’s YieldStar software collects data from landlords, including rental prices and occupancy rates, and provides users with an algorithm designed to maximize their profits by as much as 3 to 7 percent.
Diana Moss, director of competition policy at the Progressive Policy Institute, told the New York Times that the algorithm acts as a “communication mechanism” between landlords.
“This is as accessible and enforceable under U.S. antitrust law as any other form of communication we’ve seen in previous cases in the non-digital age,” Moss said.
The lawsuit is part of a broader crackdown on alleged monopoly practices in the technology industry, which also includes ongoing proceedings against Google, Apple, Amazon and Meta.
According to the New York Times, the Justice Department said this was the first major case in which an algorithm played a central role in price manipulation.
RealPage has denied the allegations, saying in a statement on its website: “RealPage’s revenue management software contributes to a healthier and more efficient rental housing ecosystem.”
The company also cited other factors contributing to rising rents, such as increased demand for rental housing, inflation and higher mortgage rates.
The lawsuit argues that landlords would compete for tenants in a free market, but RealPage’s software allegedly allows them to collude to fix prices in violation of antitrust laws.
“Americans should not have to pay more rent just because a company found a new way to work with landlords and break the law,” Attorney General Merrick Garland said in a statement.
The Justice Department also cited testimony from RealPage executives who claimed their software would allow landlords to match their prices and limit competition.
“It’s better if everyone succeeds than if we try to essentially compete with each other in a way that puts the entire industry under pressure,” one executive was quoted as saying.
