WASHINGTON — The U.S. Department of Justice, along with eight state attorneys general, filed a lawsuit against RealPage, a prominent provider of property management software. This legal move challenges the company’s practices which, according to the DOJ, enabled landlords across the nation to coordinate on setting higher rents, affecting millions of tenants in the process.
RealPage, based in Richardson, Texas, offers software that manages approximately 16 million rental units, primarily in the Sun Belt and Southern United States. The federal lawsuit, which was lodged in a North Carolina federal court, claims that RealPage holds a dominant share of about 80% in the market for “revenue management software” used by landlords.
Allegations against the tech company include sharing confidential data among landlords about rental rates, leases, and vacancy statistics. This collective data access allegedly helps property managers and owners avoid undercutting each other on prices, thus inflating rental costs at a large scale.
U.S. Attorney General Merrick Garland stressed the injustice of the situation, stating, “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.” The legal action represents a broader crackdown on practices believed to suppress competition and harm everyday consumers.
RealPage defended its operations, asserting that their software aggregates data from various sources and does not disclose specific competitors’ rates. Stephen Weissman, an external lawyer for RealPage and a former deputy director at the Federal Trade Commission’s bureau of competition, stated that the actual rental rates provided by their software are legally compliant and facilitate competitive market behavior rather than constrain it.
He further criticized the DOJ’s approach, suggesting that the quotes from executives used in the lawsuit were selectively chosen and taken out of context. Weissman also mentioned that RealPage is open to modifying its software to swiftly address the government’s concerns, underlining the company’s commitment to compliance and innovation within legal confines.
States involved in the lawsuit include California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington. This collective move underlines a significant concern regarding housing affordability and the mechanisms that potentially manipulate market dynamics at the expense of renters.
The lawsuit comes at a time when housing costs remain a critical issue for U.S. residents. House prices have reportedly surged by 50% over the past five years, with rents increasing by about 35%, based on data from real estate service firm Zillow.
This case is part of a series of government-led efforts under the Biden administration aimed at tackling consolidation and anti-competitive practices across various industries. Other significant antitrust challenges include actions against major corporations such as Google and Live Nation Entertainment, along with ongoing scrutiny over proposed mergers like those involving Kroger and Albertsons.
The DOJ’s focus on using an algorithm as a method for alleged legal infringement marks a pioneering stance in antitrust enforcement, highlighting the growing intersection of technology and regulatory oversight. As these legal battles unfold, the outcomes could set new precedents on how tech-driven strategies are treated under U.S. competition laws.