WASHINGTON — The U.S. Justice Department has launched a significant legal battle against RealPage Inc., a prominent real estate software firm, for allegedly manipulating rental market prices through its pricing algorithm. In a concerted effort with multiple state attorneys general from regions including North Carolina and California, the federal agency has charged the company with breaching antitrust laws, potentially leading to unjustifiably high rents for millions of Americans.
According to the lawsuit, RealPage’s platform enables landlords nationwide to synchronize their rental pricing strategies, diminishing the competitive practices that typically help keep housing costs in check. Authorities have cited an alarming quote from a RealPage executive who allegedly argued that collective success among property managers could be more beneficial than competitive pricing, which they claimed might depress the entire industry.
In his statement, Attorney General Merrick Garland emphasized that this manipulation should not lead to inflated expenses for renters. “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,” Garland said. Various state attorneys general have taken similar stances, alleging that the company’s software facilitates illegal price-fixing among landlords.
RealPage has defended its software and practices, insisting that the litigation lacks substance and dismissing the Justice Department’s claims as baseless. Furthermore, the company expressed disappointment over the legal actions, underscoring years of what it described as proactive engagement and compliance with antitrust regulators. “We are disappointed that…the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” a statement from RealPage read.
Legal experts point out that while using data to inform rental pricing isn’t inherently unlawful, RealPage’s application of confidential, shared data among clients to drive up prices is a key contention point. This method has drawn comparisons to traditional cartels, though now operating in digital spaces through sophisticated algorithms rather than clandestine meetings.
The scrutiny of RealPage intensified following a 2022 investigation by ProPublica, which linked the company’s pricing mechanisms to rapid rent increases. The fallout from the report has spurred legislative proposals aimed at curbing such practices. Notably, Senator Amy Klobuchar has been at the forefront of efforts to legislate against the use of algorithms for pricing collusion.
Amidst this backdrop, prominent political figures, including Vice President Kamala Harris, have voiced their commitment to tackling corporate practices that exploit pricing algorithms to artificially inflate rental markets. Speaking recently in North Carolina, Harris outlined her stance against corporate landlords manipulating prices and pledged to address these challenges head-on.
This lawsuit is part of a broader initiative under the Biden administration to enforce antitrust regulations vigorously. Earlier this year, the Justice Department took action against major players such as Apple and later against Ticketmaster and its parent company, Live Nation Entertainment. These steps underscore a growing governmental focus on ensuring fair play in the marketplace, particularly as digital technologies continue to reshape economic landscapes. Additionally, ongoing investigations into tech giants like Microsoft, Nvidia, and OpenAI reflect the administration’s keen eye on the burgeoning field of artificial intelligence and its implications across various sectors.