US prosecutors recently announced sweeping antitrust charges against RealPage, a property management software company, accusing it of using algorithms to facilitate collusion among landlords to the detriment of renters in several US markets. The Department of Justice, along with eight US states, filed a civil lawsuit against RealPage, claiming that the company has a monopoly over commercial revenue management software.
The lawsuit alleges that RealPage’s algorithmic software collects real-time pricing data and confidential information from competing landlords to generate pricing recommendations. This, in turn, allows landlords to overcharge tenants, ultimately harming consumers. It is noteworthy that this lawsuit is the first of its kind where US prosecutors have targeted anticompetitive behavior facilitated by computer algorithms.
RealPage has vehemently denied the allegations, with the company stating that it will vigorously fight the lawsuit, which they consider to be baseless. The company described the lawsuit as a distraction from the real issues driving rental inflation, such as housing supply shortages and high mortgage rates. RealPage’s spokesperson expressed disappointment in the DOJ’s decision to pursue legal action, questioning the timing and merit of the claims.
US Attorney General Merrick Garland characterized RealPage’s behavior as “classic price fixing” and emphasized the importance of competition among landlords as a safeguard for renters. The Assistant Attorney General highlighted the DOJ’s utilization of data science experts to identify how technology, specifically algorithms, can be manipulated to achieve dubious objectives in various markets.
RealPage serves companies that collectively manage around three million housing units, primarily concentrated in the US Sunbelt and the South. In Raleigh, North Carolina, RealPage reportedly holds up to 40 percent of the rental market share, with even higher penetrations observed in other markets.
It is evident that the allegations against RealPage are serious and could have significant implications for the broader property management software industry. The use of algorithms to manipulate pricing and stifle competition raises important concerns about consumer welfare and market fairness. As the case unfolds, it will be crucial to closely monitor how the legal system addresses these antitrust issues and the impact it may have on the rental market as a whole.
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