The Justice Department and attorneys general of eight U.S. states filed a civil antitrust lawsuit Friday against real estate services company RealPage for providing landlords with software that maximizes rent at the expense of tenants.
This lawsuit (PDF) alleges that RealPage illegally restricted competition among landlords through its revenue management software.
“RealPage sells software to landlords that collects nonpublic information from competing landlords and uses that combined information to make pricing recommendations,” the lawsuit says. “…RealPage replaces competition with coordination. It replaces rivalry with unity. It undermines competition and the competitive process. It does this openly and directly – and America’s renters pay the price.”
It undermines competition … It happens openly and directly – and American tenants pay the price
A 2023 analysis of the impact of algorithmic pricing on the U.S. multifamily rental market found that software-based coordination of rent prices “results in an average price increase of $25 per unit per month, impacting approximately 4.2 million units nationwide.”
“Americans should not have to pay more rent just because a company found a new way to collude with landlords and break the law,” U.S. Attorney General Merrick Garland said in a statement. “We allege that RealPage’s pricing algorithm allows landlords to share confidential, competitively sensitive information and adjust their rents.”
The attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington are joining the lawsuit against Texas-based RealPage.
The Justice Department and the Federal Trade Commission began investigating RealPage two years ago at the behest of concerned politicians. The investigation followed a private lawsuit against the company alleging that RealPage acted as a cartel to drive up rent prices to benefit landlords.
Earlier this month, the San Francisco Board of Supervisors voted to ban algorithmic price setting in the rental housing market based on concerns about property management software from companies like RealPage and Yardi. Final approval of the ban is expected to be decided next month.
The Open Markets Institute, a progressive advocacy group, expressed support for the administration’s lawsuit.
“Affordable housing is a fundamental human right,” the group said in a statement to The Register“But in city after city across the country, more and more people are finding it difficult to keep a roof over their heads as apartment rental prices have skyrocketed. One reason rents are rising is that landlords are colluding to drive up prices using software developed by RealPage.”
RealPage took the opposite view.
A distraction from the fundamental economic and political problems that are driving inflation throughout our economy
“We are disappointed that after several years of education and cooperation on the antitrust issues surrounding RealPage, the Department of Justice (DoJ) has chosen this moment to file a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” said Jennifer Bowcock, senior vice president of communications and creative at RealPage, in a statement to The Register.
“It is merely a distraction from the fundamental economic and policy issues that are driving inflation across our economy – and particularly housing affordability – and that should be the focus of policymakers in Washington, DC.
Bowcock said RealPage’s revenue management software was designed to comply with regulatory requirements, pointing to the U.S. Department of Justice’s 2017 antitrust clearance of the provider’s acquisition of Lease Rent Options (LRO) and its analysis of the company’s software as evidence that RealPage’s practices are considered acceptable – at least to the Trump administration.
“We believe the allegations made by the Department of Justice are without merit and will do nothing to make housing more affordable,” Bowcock said. “We intend to vigorously defend ourselves against these allegations.” ®
