US prosecutors recently unveiled antitrust charges against RealPage, a property management software company accused of using algorithms to enable collusion among landlords, ultimately harming renters across various US markets. The Department of Justice, along with eight US states, filed a civil lawsuit against RealPage, claiming the company maintains a “monopoly” over commercial revenue management software. RealPage has responded by promising to vigorously fight the suit, labeling it as groundless.
The lawsuit alleges that RealPage’s algorithmic software processes real-time pricing inputs and projections of vacancies and other sensitive non-public data from competing landlords. Using this information, the software generates pricing recommendations that allow landlords to charge more than they would under normal circumstances, ultimately harming consumers. This marks the first time US prosecutors have targeted anticompetitive behavior centered on computer algorithms, according to a US DOJ official.
In response to the lawsuit, RealPage has dismissed the allegations as a distraction from fundamental issues driving rental inflation, such as a lack of housing supply and high mortgage rates. The company believes that the claims brought by the DOJ are devoid of merit and will not contribute to making housing more affordable. RealPage emphasized that the software in question has been used responsibly for years and that the lawsuit fails to acknowledge this fact.
The lawsuit refers to internal documents, which include comments from RealPage executives. One such comment mentioned that there is more significant value in mutual success rather than adversarial competition that may hold back the entire industry. This statement from a RealPage executive raises concerns about the company’s practices and potential impact on market competition.
Assistant Attorney General Jonathan Kanter highlighted the DOJ’s efforts in hiring data science experts to analyze how technology, particularly algorithms, can be used to achieve questionable objectives in rental and other markets. Kanter emphasized the capacity of algorithms to process vast amounts of information quickly, potentially giving an unfair advantage to companies like RealPage. The technical capabilities of software may tilt the market in favor of monopolies, undermining the competitive process.
RealPage serves companies that represent three million housing units, with a significant presence in the US Sunbelt and the South. According to US Justice officials, in markets like Raleigh, North Carolina, RealPage accounts for around 40 percent of the rental market. The company’s market penetration reaches as high as 60 percent in certain markets, underscoring the potential impact of its actions on competition and consumers.
Overall, the antitrust charges against RealPage shed light on the growing scrutiny of technology-driven practices in competitive markets. The allegations and responses from both the company and the DOJ raise important questions about the role of algorithms in maintaining fair competition and protecting consumer interests. As the case unfolds, it will be crucial to assess the implications of these charges on the property management software industry and the broader rental market landscape.
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