Charlotte, N.C. — In an innovative legal challenge highlighting the evolving intersection of technology and antitrust laws, the U.S. Justice Department has filed a lawsuit against RealPage, a software company accused of artificially inflating apartment rents through its advanced data algorithms. This suit, alleging price fixing, claims the company has violated antitrust laws by manipulating rental price recommendations across several U.S. metropolitan areas, including Charlotte.
The federal suit contends that RealPage’s software collects sensitive rental data from apartment managers and uses this to set higher rental prices than the market would typically dictate. This is not a traditional form of price-fixing where conspirators directly set prices, but a sophisticated method that potentially distorts the housing market using artificial intelligence.
Charlotte is notably one of the top ten metro areas where RealPage’s influence and customer base are most significant, with an estimated 29% to 38% market penetration. This high usage rate is indicative of the software’s role in shaping local rental market dynamics.
The Justice Department emphasizes that this modern approach to price fixing contrasts sharply with more overt collusive behaviors historically targeted by antitrust laws. By using AI-driven algorithms, RealPage has allegedly coordinated rent prices in a subtle yet impactful way, according to federal authorities.
The complaints against RealPage have sparked a broader examination of price-setting practices in the real estate industry. Prominent national real estate companies, including Greystar and Lincoln Property Co., have been named in similar lawsuits, accused of using RealPage’s software to maintain high rental prices.
In defense, RealPage denies any wrongdoing, asserting that its technology is a competitive tool that legally aids property managers in achieving their financial objectives. The company argues that its recommendations can lead to decreased or stable prices, depending on the specific goals of the property managers utilizing the platform.
In response to the lawsuit, RealPage contends that the legal challenges are overblown and do not accurately represent the company’s market share or the functionality of its software. They suggest that the lawsuit misunderstands the technology’s application in the real estate market, which they claim benefits both property owners and tenants by providing well-informed pricing strategies.
Adding another layer to this legal battle, North Carolina Attorney General Josh Stein, who is currently running for governor, has joined the federal lawsuit. This move aligns with his public stance on protecting consumer rights and overseeing fair market practices within the state.
Moreover, the timing of the lawsuit coincides with a downtrend in rental prices in Charlotte, as newly built apartment complexes increase local housing supply. This recent decrease in rent prices complicates the lawsuit’s context, highlighting the dynamic nature of real estate markets and the challenging task of pinning down illegal conduct related to pricing algorithms.
This lawsuit is among several, following similar accusations by private entities that have increasingly scrutinized RealPage’s practices. As these legal challenges unfold, they may set significant precedents for how antitrust laws are applied to AI and data analytics technologies across industries far beyond real estate.