US prosecutors recently made headlines by accusing RealPage, a property management software company, of engaging in antitrust behavior that harms renters across various US markets. The Department of Justice, along with eight US states, filed a civil lawsuit against RealPage, claiming that the company’s use of algorithms enables collusion among landlords, ultimately leading to adverse effects on consumers. According to the DOJ press release, RealPage has been accused of maintaining a monopoly over commercial revenue management software, which allows landlords to charge higher prices at the expense of renters.
RealPage has vehemently denied the allegations, asserting that the lawsuit is groundless and vowing to vigorously fight the charges. The company’s spokesperson described the lawsuit as a distraction from the underlying factors contributing to rental inflation, such as housing supply shortage and high mortgage rates. RealPage argued that their technology has been used responsibly for years, and they believe that the claims brought forth by the DOJ lack merit and will not contribute to making housing more affordable.
The lawsuit filed against RealPage is significant as it marks the first time that US prosecutors have targeted anticompetitive behavior that revolves around computer algorithms. Attorney General Merrick Garland likened RealPage’s conduct to “classic price fixing,” emphasizing the importance of competition among landlords as a means of protecting renters. The use of data science experts by the DOJ enabled a closer examination of how technology, specifically algorithms, can be leveraged to achieve questionable ends in the rental and other markets.
RealPage serves companies that manage three million housing units, with a notable presence in the US Sunbelt and the South. In markets like Raleigh, North Carolina, RealPage accounts for a significant portion of the rental market, reaching up to 40 percent market share. The company’s penetration is even higher in certain markets, going as high as 60 percent, posing potential concerns about unfair market practices and consumer harm.
The antitrust charges against RealPage have ignited a legal battle that could have far-reaching implications for the rental market and consumers. The use of algorithms in facilitating collusion among landlords raises concerns about market manipulation and unfair pricing practices. As the case unfolds, it will be crucial to assess the impact of such anticompetitive behavior on renters and the broader housing market.
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