In recent years, renters in the US have been feeling the pressure of rising apartment prices. Whether it’s in your building or others across the city, the increase in rental rates seems to be coordinated. The US Department of Justice has recently filed a civil lawsuit that sheds light on this issue, pointing the finger at RealPage, a Texas-based company that provides commercial revenue management software for landlords. According to the lawsuit, RealPage’s algorithm is at the heart of the problem, enabling landlords to cheat the system by feeding data into the software, which then spits out suggested prices that discourage competition.
RealPage’s dominance in the market is concerning, as it controls 80 percent of the market share for this type of software. This means that around 3 million rental units across the country have their prices set using RealPage’s algorithm. The company is already facing multiple legal challenges, including lawsuits from the state of Arizona and Washington, DC. The fact that RealPage’s software is used to price more than 90 percent of units in large apartment buildings in DC is particularly alarming.
The DOJ’s civil lawsuit represents a significant escalation in legal action against RealPage. This is the first time that the Justice Department has taken civil action against a company for algorithm-enabled price-fixing. The complaint cites RealPage executives acknowledging the anticompetitive nature of their product, highlighting the company’s questionable business practices. While RealPage has denied any wrongdoing, the evidence presented in the lawsuit paints a different picture.
RealPage has attempted to defend its practices by publishing materials that claim to provide the “real story” about its products. The company insists that its software benefits both housing providers and residents, despite the DOJ’s allegations. However, the government’s stance is clear – algorithms are not above the law. Deputy Attorney General Lisa Monaco emphasized this point during a press conference, highlighting the need for accountability in the tech industry.
RealPage’s algorithmic pricing practices have come under scrutiny for their potential to hinder competition and manipulate rental prices across the country. The DOJ’s lawsuit represents a significant step towards holding companies accountable for using technology to engage in anticompetitive behavior. As the case unfolds, it raises important questions about the role of algorithms in shaping consumer markets and the need for regulation to prevent abuse of power.
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