WASHINGTON, DC – AUGUST 23, 2024: In an unprecedented move, the U.S. Department of Justice (DOJ), flanked by officials from eight states, unveiled sweeping antitrust charges today against RealPage, a Texas-based real estate software company. The DOJ alleges that RealPage has leveraged its algorithmic technology to facilitate illegal collusion among landlords, driving up rental prices and harming consumers across multiple US markets.
During a press conference held at the DOJ headquarters, Deputy Attorney General Lisa Monaco, joined by Attorney General Merrick Garland and Assistant Attorney General Jonathan Kanter, discussed the significant impact of RealPage’s practices on the rental market. The lawsuit, filed in a North Carolina court, marks a historic first for US prosecutors who are targeting anti-competitive behavior specifically centered around computer algorithms.
“Classic Price Fixing”
Attorney General Garland minced no words in condemning RealPage’s conduct, characterizing it as “classic price fixing.” He emphasized that competition among landlords serves as a vital mechanism for protecting renters from unjustified rent increases. “Everybody knows the rent is too damn high, and we allege this is one of the reasons why,” Garland stated.
The DOJ’s complaint asserts that RealPage’s software integrates real-time pricing inputs and sensitive non-public data from competing landlords to generate pricing recommendations, effectively enabling landlords to set higher rents than they would under competitive conditions.
RealPage Vows to Fight Back
RealPage has categorically denied the allegations, promising to “vigorously” contest what it deems a baseless suit. A company spokesperson described the DOJ’s action as a “distraction” from more systemic issues affecting the housing market, such as a scarcity of supply and high mortgage rates.
“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” RealPage said in a prepared statement. “We believe the claims brought by DOJ are devoid of merit and will do nothing to make housing more affordable.”
Internal Evidence
The lawsuit references internal company documents, including one from a RealPage executive suggesting that collusion was preferable to competition, stating “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”
Assistant Attorney General Kanter highlighted the instrumental role of the DOJ’s newly recruited data science experts in examining how technology can be wielded to subvert competitive processes in various markets. “Algorithms process far more information, far more rapidly than humans ever could,” Kanter explained. “The technical capabilities of software can enhance a competitor’s ability to extract gains, tip the market in favor of monopolies, and undermine the competitive process.”
Market Dominance
US Justice officials noted that RealPage’s software services manage properties amounting to three million housing units, with a particularly strong foothold in the US Sunbelt and the South. Remarkably, RealPage controls approximately 40 percent of the rental market in Raleigh, North Carolina, and as much as 60 percent in other markets.
As the legal battle unfolds, the case promises to cast light on the increasingly intricate intersection of technology and market regulation, challenging established practices in an era where algorithms hold significant sway over economic outcomes.
