The Department of Justice has targeted RealPage Inc. in an antitrust lawsuit, but the full story reveals far-reaching implications for landlords and tenants alike.
At a Glance
- The Justice Department filed an antitrust lawsuit against RealPage Inc.
- RealPage is accused of enabling landlords to coordinate rent increases illegally.
- Several states have also sued RealPage for similar allegations.
- RealPage denies the claims, arguing its software promotes a healthier rental market.
- Legal experts and lawmakers are considering reforms to address antitrust issues related to new technologies.
DOJ Takes Action Against RealPage
The Department of Justice filed an antitrust lawsuit against RealPage Inc., accusing the real estate software company of enabling landlords to coordinate rental price increases. The suit involves attorneys general from states like North Carolina and California. RealPage’s algorithm allegedly helps landlords align rental prices, thus reducing competition in the housing market. This lawsuit is one of the most significant civil antitrust cases involving the role of algorithms in pricing manipulation.
According to the Justice Department, RealPage’s software, YieldStar, collects and analyzes confidential real estate information to suggest rental prices. The algorithm’s recommendations are often higher than what would be expected in a competitive market. RealPage is also accused of encouraging landlords to share nonpublic data to raise rents, replacing independent pricing decisions with coordinated efforts to hike rents.
The Justice Department and eight states sued RealPage, accusing it of deploying a rent-setting algorithm that allows landlords to illegally coordinate price increases https://t.co/CwcgUUs7Px https://t.co/CwcgUUs7Px
— The Wall Street Journal (@WSJ) August 23, 2024
The Ethical and Legal Implications
RealPage’s practices raise significant ethical and legal concerns. Coordinated rent increases undermine market competition, leading to higher housing costs for millions of people. According to the lawsuit, RealPage’s software tracked compliance with its pricing recommendations, and some property management personnel’s compensation was tied to following these recommendations, further incentivizing the collusive behavior.
“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” Attorney General Merrick Garland said.
The Biden administration has been actively pursuing antitrust enforcement across various sectors. Recent actions have included lawsuits against companies like Apple and Ticketmaster, and investigations into Microsoft, Nvidia, and OpenAI. This aggressive stance underscores the administration’s focus on curbing anti-competitive practices and promoting fair market competition.
RealPage’s Defense and Broader Implications
RealPage has denied the claims, stating that its software actually contributes to a healthier and more efficient rental housing ecosystem. A RealPage spokeswoman mentioned that the company’s revenue management software was purposely built to be legally compliant. Despite these defenses, the allegations brought forward by the DOJ and several states suggest a pattern of anti-competitive behavior that has significantly impacted the rental market.
Legal experts and lawmakers are now considering reforms to better address antitrust issues related to new technologies and protect consumer rights. Amid a building boom, landlords are offering incentives like free parking or rent-free weeks to fill vacancies, further complicating the rental market dynamics.
Sources
- U.S. Justice Department sues RealPage, alleging it enabled price-fixing on rents
- Software firm illegally let landlords coordinate rent increases: feds
- Justice Department accuses RealPage of a scheme to help landlords hike rents in antitrust lawsuit
