US prosecutors recently unveiled antitrust charges against RealPage, a property management software company, accusing them of using algorithms to enable collusion among landlords and harming renters in various US markets. The Department of Justice, along with eight US states, filed a civil lawsuit against RealPage, alleging that the company maintains a monopoly over commercial revenue management software. RealPage has vowed to vigorously fight the lawsuit, which they deem groundless.
According to the complaint filed in a US court in North Carolina, RealPage’s algorithmic software takes real-time pricing inputs and projects vacancies and sensitive non-public data from competing landlords. The software then generates pricing recommendations that allow landlords to charge more than they would otherwise. This deceptively harms consumers and distorts competition in the rental market.
This lawsuit marks the first time US prosecutors have aimed at anticompetitive practices centered around computer algorithms. Attorney General Merrick Garland described RealPage’s behavior as “classic price fixing,” emphasizing the importance of competition among landlords to protect renters. He pointed out that the high cost of rent is influenced by such practices, making it unaffordable for many individuals.
RealPage, on the other hand, dismissed the lawsuit as a distraction from the real issues driving rental inflation, such as housing supply shortages and high mortgage rates. The company believes that their technology has been used responsibly for years and that the claims brought by the DOJ lack merit. A spokeswoman for RealPage stated that the lawsuit is an attempt to scapegoat the company’s pro-competitive technology.
Assistant Attorney General Jonathan Kanter highlighted the role of data science experts in scrutinizing how technology, particularly algorithms, can be utilized to achieve questionable objectives in various markets. The speed and capacity of algorithms to process vast amounts of data make them potential tools for strengthening monopolies and undermining competition.
RealPage serves companies that manage three million housing units, with a significant presence in the US Sunbelt and South. In Raleigh, North Carolina, RealPage holds around 40 percent of the rental market, while reaching as high as 60 percent market penetration in some areas. This level of dominance raises concerns about the company’s impact on rental prices and market dynamics.
The allegations against RealPage shed light on how algorithms, when misused, can lead to collusion, price fixing, and harm to consumers. The case underscores the need for vigilant oversight and regulation of technology companies, particularly those with significant market influence. Addressing anticompetitive practices in the digital age is crucial to maintaining fair and competitive markets for the benefit of all stakeholders.