The U.S. Department of Justice (DOJ) has launched a civil lawsuit against RealPage, a Texas-based real estate technology company. The suit alleges that RealPage’s software utilizes confidential landlord data to artificially inflate rent prices across the United States, effectively stifling market competition.
Key Allegations
- RealPage’s algorithm uses nonpublic data from landlords to generate pricing recommendations.
- This practice allegedly creates a “vast scheme to subvert the competitive process,” according to DOJ officials.
- The software is accused of enabling landlords to share sensitive competitive information and coordinate their rental prices.
Attorney General Merrick Garland stated, “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.” He emphasized the severity of the situation, adding, “The rent is too damn high, and this is one of the reasons why.”
Scope and Impact
- RealPage’s software is used to manage approximately 3 million rental units, primarily in Southern states.
- The DOJ claims the software holds a monopoly in the rental management software market.
- The lawsuit highlights concerns about the increasing prevalence of corporate landlords and their impact on the rental market.
Legal Implications
This case is notable for its focus on algorithmic antitrust violations. Despite the modern technology involved, DOJ officials characterize it as “one of the oldest” examples of antitrust law infringement in the U.S.
The lawsuit argues that in a free market, landlords would compete independently to attract renters based on various factors such as pricing, discounts, and lease terms. Instead, RealPage’s system allegedly allows for coordinated pricing strategies that harm renters.
Broader Context
The case is set against the backdrop of growing concerns about housing affordability and the increasing role of corporate landlords in the rental market. DOJ officials noted that corporate landlords, who can afford such software, are more likely to evict tenants at higher rates.
As this legal battle unfolds, it may have significant implications for the future of rental pricing practices and the use of algorithms in real estate management.
