Recently, US prosecutors unveiled an antitrust lawsuit against RealPage, a property management software company, accusing it of using algorithms to facilitate collusion among landlords. These tactics allegedly harm renters across various US markets, prompting the Department of Justice and eight US states to take legal action against the Texas-based company.
The lawsuit, filed in a US court in North Carolina, claims that RealPage’s algorithmic software enables landlords to coordinate pricing strategies based on real-time data from competing landlords. This practice allegedly results in higher rental prices, disadvantaging consumers. Attorney General Merrick Garland characterized RealPage’s behavior as “classic price fixing,” emphasizing the importance of competition in protecting renters from inflated prices.
In response to the lawsuit, RealPage vowed to vigorously defend itself against the allegations, dismissing the claims as baseless. The company argued that the lawsuit is a distraction from the fundamental factors driving rental inflation, such as housing supply constraints and high mortgage rates. RealPage maintained that its technology has been used responsibly for years and that the DOJ’s claims lack merit.
Assistant Attorney General Jonathan Kanter highlighted the increasing role of technology, particularly algorithms, in shaping competitive dynamics in various markets. Data science experts hired by the DOJ have helped identify how algorithms can be utilized to manipulate markets and undermine the competitive process. Kanter emphasized the rapid processing capabilities of algorithms, which can give companies an unfair advantage and contribute to market monopolies.
RealPage serves companies representing three million housing units, with a significant presence in the US Sunbelt and South regions. In markets like Raleigh, North Carolina, RealPage reportedly accounts for a substantial portion of the rental market share, raising concerns about its market dominance. US Justice officials expressed unease over the company’s penetration, which reaches up to 60 percent in certain markets.
The antitrust charges against RealPage shed light on the challenges posed by algorithmic technology in ensuring fair competition and consumer protection. The ongoing legal battle between the company and US prosecutors underscores the need for regulatory oversight in the tech-driven real estate sector. As the case progresses, the outcome could have broader implications for the use of algorithms in shaping market dynamics and consumer welfare.
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