US sues RealPage over rent-setting software that allegedly drove up prices
Image: Cath Virginia / The Verge
The Justice Department is suing the company behind a widely used software that helps landlords set rental prices. It alleges that RealPage’s rent recommendation algorithm drives up prices and “deprives renters of the benefits of competition on apartment leasing terms.”
In the complaint, the DOJ, along with eight states, claim that RealPage obtains nonpublic rental price information from competing landlords who use the software. RealPage then allegedly feeds this information into its algorithmic pricing software, which landlords can use to get suggestions about their rent rates.
When landlords collude to delegate pricing decisions to algorithms, renters can lose out on the benefits of competition and face higher rates. I called on the DOJ to investigate RealPage’s use of algorithms to set rents and now they are taking action with a major antitrust case.— Amy Klobuchar (@amyklobuchar) August 23, 2024
As alleged in the lawsuit, “these are more than just ‘recommendations,’” as RealPage also “reviews and weighs in on landlords’ other policies,” in which it attempts to end concessions and discounts for renters. Landlords can also “effectively agree to outsource their pricing function” to RealPage with an “auto accept” option that automatically adjusts their rents based on its algorithm.
“In a competitive marketplace, each landlord may independently decide to offer concessions so that it can better compete in enticing lessors,” the complaint alleges. “But, again, RealPage seeks to replace fully independent, competitive decision-making with collective action by ending concessions.”
Additionally, the DOJ claims RealPage maintains a monopoly in commercial revenue management software for multi-family dwellings, making up around 80 percent of market share. RealPage’s “unlawful agreements” with landlords and the sensitive data it receives from them give the company a competitive advantage, the lawsuit alleges. The Verge reached out to RealPage with a request for comment but didn’t immediately hear back.
RealPage has been in the DOJ’s sights for quite some time now. Rumors about a potential lawsuit first surfaced after a 2022 ProPublica report revealed how RealPage’s algorithm may have contributed to increasing rent rates across the country.
Image: Cath Virginia / The Verge
The Justice Department is suing the company behind a widely used software that helps landlords set rental prices. It alleges that RealPage’s rent recommendation algorithm drives up prices and “deprives renters of the benefits of competition on apartment leasing terms.”
In the complaint, the DOJ, along with eight states, claim that RealPage obtains nonpublic rental price information from competing landlords who use the software. RealPage then allegedly feeds this information into its algorithmic pricing software, which landlords can use to get suggestions about their rent rates.
When landlords collude to delegate pricing decisions to algorithms, renters can lose out on the benefits of competition and face higher rates. I called on the DOJ to investigate RealPage’s use of algorithms to set rents and now they are taking action with a major antitrust case.
— Amy Klobuchar (@amyklobuchar) August 23, 2024
As alleged in the lawsuit, “these are more than just ‘recommendations,’” as RealPage also “reviews and weighs in on landlords’ other policies,” in which it attempts to end concessions and discounts for renters. Landlords can also “effectively agree to outsource their pricing function” to RealPage with an “auto accept” option that automatically adjusts their rents based on its algorithm.
“In a competitive marketplace, each landlord may independently decide to offer concessions so that it can better compete in enticing lessors,” the complaint alleges. “But, again, RealPage seeks to replace fully independent, competitive decision-making with collective action by ending concessions.”
Additionally, the DOJ claims RealPage maintains a monopoly in commercial revenue management software for multi-family dwellings, making up around 80 percent of market share. RealPage’s “unlawful agreements” with landlords and the sensitive data it receives from them give the company a competitive advantage, the lawsuit alleges. The Verge reached out to RealPage with a request for comment but didn’t immediately hear back.
RealPage has been in the DOJ’s sights for quite some time now. Rumors about a potential lawsuit first surfaced after a 2022 ProPublica report revealed how RealPage’s algorithm may have contributed to increasing rent rates across the country.