The US Department of Justice has filed an antitrust lawsuit against real estate software company RealPage, accusing the company of plotting rent increases with other landlords across the country and using an algorithm that sets high recommended rental prices.
“Everyone knows the rent is way too damn high. And we argue that’s one of the reasons why,” said U.S. Attorney General Merrick Garland.
The lawsuit is being filed jointly with the attorneys general of eight states, including California and North Carolina.
In 2021 and 2022, rents exploded across the country. In the 50 largest metropolitan areas, rents rose 19.3% in one year. The increase has slowed since then, but remains high for many renters.
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RealPage has been in the public spotlight since 2022, when a ProPublica investigation suggested it might be one of the reasons for the sharp increase.
The Justice Department believes this algorithm helped pit landlords against each other and undermine competition that would normally lead to lower prices.
“Competing landlords agree to provide RealPage with their most sensitive, nonpublic information on a daily basis, including rental rates, lease terms and projected vacancy rates. RealPage then combines this data from competing landlords and feeds it into an algorithm that provides competing landlords with real-time pricing recommendations,” Garland said.
While the company is not the only one offering such software, according to the lawsuit, it is the largest in the industry and allegedly controls 80 percent of the market.
“So make no mistake: Training a machine to break the law is still breaking the law. Price coordination using artificial intelligence is still price coordination. And monopolization by an algorithm is still monopolization,” said Lisa Monaco, U.S. Assistant Attorney General.
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Detroit-based litigator Michael Jaafar argues that the lawsuit is a fallacy that unfairly places blame for the housing market on a single private company whose services are not mandatory, even though it has a majority share of the market.
“That’s wrong. And I’ll tell you why it’s wrong: because RealPage is just a service. It’s an analytics platform… It’s not like they’re providing a utility service that everyone has to use. It’s not like it’s the railroad,” Jaafar said.
In a statement to AP, RealPage said the lawsuit was “meritless and will do nothing to make housing more affordable.”
This filing is the latest attempt by the U.S. Department of Justice to address rising prices through antitrust cases against Apple and TicketMaster, among others. But Jaafar doesn’t think it’s the right move to combat high costs.
“The government is not interested in making money. It is interested in creating justice. It becomes problematic when a government pursues political agendas,” he said.
As both sides move into the next phase, Jaafar says RealPage is in for a fight.
“You either live or you die. There have been websites that have just died under something like this. I don’t think that would happen to RealPage. RealPage just has to fight it, and fight it in the public spectrum,” Jaafar said.
