In recent developments, RealPage Inc., a prominent real estate software company based in Richardson, is currently facing a federal antitrust lawsuit brought by the U.S. Department of Justice (DOJ) alongside attorneys general from eight states. The lawsuit alleges that RealPage’s algorithmic pricing software enables landlords to collude on rental prices, thereby stifling competition and driving up rents across the United States. This legal action represents a significant move by the DOJ to address concerns over monopolistic practices in the real estate software market.
According to the complaint filed in the Middle District of North Carolina, RealPage manages an estimated 80% of the market for commercial revenue management software. The algorithmic pricing mechanisms provided by RealPage allow landlords to share confidential rental information, which is then used to make pricing recommendations. The DOJ alleges that such practices effectively coordinate rental pricing decisions, depriving renters of the competitive pricing that a free market would typically offer.
Attorney General Merrick Garland emphasized the gravity of the situation, asserting, “Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law.” This sentiment was echoed by Deputy Attorney General Lisa Monaco, who stated, “Training a machine to break the law is still breaking the law.” These statements highlight the DOJ’s commitment to tackling anti-competitive conduct in this sector relentlessly.
Stephen Weissman, an antitrust attorney representing RealPage, contested the allegations, arguing that the DOJ’s lawsuit “cherry-picks” data and statements out of context. He underscored that RealPage’s software aggregates anonymized data from multiple sources to provide pricing recommendations and contended, “The software is not driving higher rates than what would happen in a competitive market.” Weissman also noted that RealPage is willing to cooperate with the DOJ to find solutions that allow the company to continue its innovative practices legally.
The implications of this lawsuit are substantial, given the widespread use of RealPage’s software in managing rental units nationwide. Eric Dunn from the National Housing Law Project articulated concerns, noting that landlords using RealPage’s software are encouraged to configure it to automatically accept pricing suggestions, potentially limiting competition further. Dunn explained, “If a property manager doesn’t want to accept the recommendation, they have to put in an explanation,” which is then sent to a regional manager, thereby creating a coercive environment.
The historical context of this case reveals broader issues within the market. A 2022 ProPublica investigation suggested that RealPage’s software could be contributing to the rapid rise in housing costs. This has attracted attention from legislators, with Senator Amy Klobuchar introducing a bill to prohibit the use of algorithms in price-fixing.
Ultimately, this legal battle underscores the intricate relationship between technology and market regulation. As the proceeding unfolds, it will likely set critical precedents regarding the use and regulation of algorithmic pricing tools in the housing market. The outcome will be closely watched by stakeholders across the legal, corporate, and real estate sectors, reflecting broader shifts in how technology is governed in market economies.
News Sources
- RealPage says it’s willing to work with DOJ over rent algorithm lawsuit
- RealPage ‘open to solutions’ to resolve DOJ lawsuit over rental data
- RealPage accused of helping landlords collude to raise rents
- Richardson-based RealPage sued by DOJ over apartment pricing
- Oregon joins Justice Department lawsuit accusing RealPage of violating antitrust laws through scheme to hike rent
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Source: HaystackID
