The landscape of the rental market in the US has been marred by suspicions of price fixing for quite some time. Many renters have felt the burden of increasing apartment prices not only in their own buildings, but across entire cities. A recent civil lawsuit filed by the US Department of Justice has shed light on a disturbing trend: the role of algorithms in perpetuating this cycle of price coordination and hindering competition.
The Role of RealPage
At the center of this controversy is RealPage, a Texas-based company that provides commercial revenue management software to landlords. This software, known for its algorithmic pricing capabilities, allows landlords to input rental rate and lease data, which the algorithm then uses to generate suggested prices for apartments. The DOJ’s lawsuit alleges that this system effectively enables price coordination among landlords, stifling competition in the rental market.
RealPage’s dominance in the market cannot be understated. With control over 80 percent of the software market in its niche, the company’s software is responsible for setting prices for approximately 3 million rental units nationwide. The company is currently facing multiple lawsuits, including one from the state of Arizona and another in Washington, DC, where RealPage software is reportedly used to price more than 90 percent of units in large apartment buildings.
The allegations against RealPage are serious and far-reaching. The DOJ’s lawsuit, joined by attorneys general from eight states, points to the company’s algorithm as the key instrument in violating antitrust laws. RealPage executives are quoted in the complaint as acknowledging the anticompetitive nature of their product. Despite these claims, RealPage has vehemently denied any wrongdoing and has launched a public relations campaign to defend its practices, including publishing digital pamphlets and FAQ pages on its website.
The Impact of Algorithms on Antitrust Laws
This case represents a significant escalation in legal action against companies using algorithms to facilitate anticompetitive practices. While previous cases have focused on individuals involved in price-fixing schemes, the RealPage lawsuit marks the first civil action where the algorithm itself is implicated as the tool of violation. The implications of this case are far-reaching, as it raises questions about the regulatory oversight of algorithmic pricing in various industries.
The RealPage algorithm controversy highlights the growing importance of regulatory scrutiny in the digital age. As algorithms play an increasingly vital role in setting prices and influencing consumer behavior, it is crucial for authorities to monitor and regulate their usage to prevent anticompetitive practices. The outcome of the DOJ’s lawsuit against RealPage will likely set a precedent for future cases involving algorithm-enabled violations of antitrust laws. It is imperative for companies to operate within legal boundaries and prioritize fair competition in the market.
Leave a Reply