The recent antitrust charges brought against RealPage, a property management software company, have shed light on the use of algorithms to enable collusion among landlords. This practice has been harming renters across numerous US markets, leading to higher rental prices and limited competition. The Department of Justice, along with eight US states, filed a civil lawsuit against RealPage, accusing the company of maintaining a monopoly over commercial revenue management software.
The lawsuit alleges that RealPage’s algorithmic software takes real-time pricing inputs and projects vacancies and other sensitive non-public data from competing landlords. By generating pricing recommendations based on this data, the software allows landlords to charge more than they otherwise would, ultimately harming consumers. This marks the first time US prosecutors have targeted anticompetitive behavior centered on computer algorithms, signaling a shift in how technology is being used in the rental market.
Attorney General Merrick Garland described RealPage’s conduct as “classic price fixing,” highlighting the importance of competition among landlords in protecting renters. The high rental prices in many US markets have been a pressing issue, with Garland pointing out that this alleged collusion among landlords is one of the factors contributing to the problem. The lawsuit aims to hold RealPage accountable for its role in driving up rental prices through the use of algorithmic software.
In response to the lawsuit, RealPage has vowed to “vigorously” fight the charges, dismissing them as groundless. The company maintains that the allegations are devoid of merit and that their technology has been used responsibly for years. RealPage argues that the lawsuit is a distraction from the fundamental issues driving rental inflation, such as the lack of housing supply and high mortgage rates. Despite the legal challenges, RealPage stands by the pro-competitive nature of their technology.
Assistant Attorney General Jonathan Kanter emphasized the role of algorithms in antitrust cases, highlighting how technology can be used to manipulate markets and undermine competition. With the hiring of data science experts, the Department of Justice has been able to scrutinize the use of algorithms in the rental market and beyond. Kanter pointed out that algorithms process information at a rapid pace, giving companies an unfair advantage that can lead to monopolies and hinder the competitive process.
RealPage serves companies that manage three million housing units, with a significant presence in the US Sunbelt and the South. In markets like Raleigh, North Carolina, RealPage accounts for a sizable portion of the rental market, with its penetration reaching as high as 60 percent in some areas. This dominance in key markets has drawn attention from US Justice officials, who are closely monitoring the impact of RealPage’s software on competition and consumer welfare.
The antitrust charges against RealPage highlight the growing concern over the use of algorithms in driving collusion and limiting competition in the rental market. As technology continues to advance, it is crucial for regulatory authorities to closely scrutinize how algorithms are being used to ensure a level playing field for renters and promote healthy competition among landlords.
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