The Department of Justice, along with eight states, has filed a lawsuit against RealPage, the company behind a widely used software that helps landlords set rental prices. The lawsuit alleges that RealPage’s rent recommendation algorithm is driving up prices and “depriving renters of the benefits of competition on apartment leasing terms.” According to the complaint, RealPage obtains nonpublic rental price information from competing landlords who use the software and uses this data to inform its algorithmic pricing recommendations.
The DOJ claims that RealPage’s algorithm goes beyond simple recommendations and actually influences landlords’ policies, including the elimination of concessions and discounts for renters. Landlords are able to automatically adjust their rents based on the algorithm’s suggestions, effectively outsourcing their pricing decisions to RealPage. This, according to the complaint, eliminates independent decision-making and competitive pricing strategies among landlords, leading to a loss of competition in the marketplace.
Furthermore, the DOJ asserts that RealPage holds a monopoly in commercial revenue management software for multi-family dwellings, with an estimated 80 percent market share. The company’s alleged “unlawful agreements” with landlords and access to sensitive rental data give it a significant competitive advantage over other software providers in the market. This advantage allows RealPage to maintain its dominant position and potentially stifle innovation and competition in the industry.
RealPage has been under the scrutiny of the DOJ for some time now, with concerns raised about its business practices and their impact on competition and consumer welfare. The lawsuit represents a significant escalation of these concerns, alleging anticompetitive behavior and market manipulation through RealPage’s rent recommendation algorithm. If the DOJ’s allegations are proven true, it could have far-reaching implications for the real estate industry and the technology companies that provide services to landlords and property managers.
The lawsuit filed by the Department of Justice against RealPage highlights the potential dangers of algorithmic pricing software and the need for robust antitrust enforcement in the tech industry. The case serves as a reminder that innovation and competition must be protected to ensure fair pricing and consumer choice in the marketplace.