If you’ve rented an apartment in the US in the past few years, you might have had the feeling that the game was rigged: Prices are rising not just in your building but in others across the city, seemingly at the same pace. A recent civil lawsuit filed today by the US Department of Justice claims that in many cases, it’s not just happening in your head — and that one company’s algorithm is to blame.
That company is RealPage, a Texas-based company that provides commercial revenue management software to landlords. In other words, it helps set housing prices. But it does so, the DOJ alleges in its lawsuit, by effectively helping its clients cheat; landlords enter rent rates and lease terms into the system, and RealPage’s algorithm in turn spits out a suggested price that enables coordination and stifles competition.
“By feeding confidential data into an advanced AI-powered algorithm, RealPage has found a novel way to break a century of law by systematically coordinating rental prices,” Assistant Attorney General Lisa Monaco said in a statement.
RealPage’s reach is expansive. It controls 80 percent of the market for such software, which in turn is used to set prices for about three million units nationwide, according to DOJ data. The company is already facing multiple lawsuits, including one from the state Arizona and one more in Washington, DCwhere RealPage software is allegedly used to set the prices of more than 90 percent of the units in huge apartment buildings. RealPage’s algorithmic pricing first gained wider attention when ProPublica Investigation 2022 showed how the company’s YieldStar software works.
The DOJ civil lawsuit, joined by attorneys general from eight states, is a significant escalation of legal action against the company. It is also the first such action by the DOJ, according to officials speaking on background during a phone call to discuss the complaint. While the government previously filed a criminal lawsuit, fees against an Amazon seller for algorithmic pricing, the first civil lawsuit in which an algorithm itself, a Justice Department official alleges, was actually the instrument of infringement.
The complaint itself quotes RealPage executives who allegedly admit that their product is anti-competitive. “There is a greater good in everyone being successful than in them simply trying to compete with each other in a way that actually keeps the entire industry down,” one RealPage executive allegedly wrote.
RealPage has repeatedly denied any antitrust allegations, even going so far as to release a six-page digital document booklet which claims to tell the “Real Story” about its products, along with a lengthy FAQ page on a dedicated public policy website. “The attacks on revenue management in the industry are based on proven false information,” reads one section of the site. RealPage revenue management software benefits both housing providers and residents.”
This is a developing story. Please check back for updates.