On Friday, the Justice Department filed an antitrust lawsuit against RealPage Inc., accusing the real estate software company of orchestrating a sophisticated yet illicit scheme that has led to higher rental prices for tenants nationwide.
According to the complaint, RealPage's pricing software facilitated illegal coordination among landlords, allowing them to share confidential information about rental rates and lease terms. This information was used to inform RealPage’s algorithm, which then provided recommendations on how to set rental prices.
Normally, landlords would set prices based on factors like location, market rates, and demand. However, with the private shared data from RealPage’s algorithm, landlords might set prices together, reducing competition and keeping rents higher than they might be in a more competitive market. The core allegation is that this system enabled landlords to adjust their pricing strategies in a way that unfairly stifled competition and artificially inflated rents.
Antitrust laws are designed to promote competition and prevent monopolistic practices that harm consumers. In this case, the Justice Department argues that RealPage's software effectively turned competitive market dynamics into a coordinated effort among landlords to keep prices high. This practice, if proven, would be a violation of antitrust regulations, which prohibit agreements or practices that restrict competition or manipulate market conditions.
RealPage has previously faced civil lawsuits at the state level concerning similar allegations of collusion. However, this federal lawsuit is significant because it is one of the first of its kind to challenge an advanced algorithmic pricing system as a form of collusion. The use of algorithms to facilitate price-fixing represents a modern twist on traditional antitrust concerns, where the manipulation of digital tools and data can have wide-reaching effects on market behavior.
The complaint cites internal communications from RealPage executives that suggest the company's software was intentionally designed to help landlords maximize their rental income by exploiting shared confidential information. One quoted statement from a RealPage executive reportedly described the software's effect as a "rising tide raises all ships," implying that the tool facilitated a collective increase in rents across the board.
The Justice Department's lawsuit hasn’t disclosed what penalties it will pursue if a judge determines that RealPage violated antitrust laws. However, the department has stated it will seek a court order requiring RealPage to stop its alleged collusion with landlords and to promote competition to benefit renters nationwide.
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