The Justice Department has initiated a civil lawsuit against the real estate company RealPage, accusing the firm of using its software to manipulate landlord data in order to artificially inflate rental prices across the United States, thereby stifling market competition.
The complaint alleges that the Texas-based company exploits nonpublic data from landlords to train its algorithm, which in turn generates pricing recommendations.
This practice, according to a Justice Department official, constitutes a “vast scheme to subvert the competitive process.”
“Americans should not be forced to pay higher rents because a company has devised a new way to collude with landlords and break the law,” stated Attorney General Merrick Garland on Friday.
“We allege that RealPage’s pricing algorithm allows landlords to share confidential, competitively sensitive information and align their rental prices.”
The complaint further details how the software utilizes confidential landlord data to monitor competitors’ pricing and optimize the rent landlords can charge, along with identifying additional ways to increase profits from tenants.
“The rent is too damn high, and this is one of the reasons why,” Garland remarked during a press conference on Friday.
The lawsuit is noteworthy for alleging that the company’s algorithm violates antitrust laws, a rare claim according to Justice Department officials, though it represents “one of the oldest” forms of antitrust violations in U.S. history.
The lawsuit comes in the context of a growing trend of corporate landlords—companies that own large numbers of rental units—playing a central role in the case.
“It is not lost on us that all of this collusion is happening against the backdrop of increasing corporate landlord concentration,” an official commented, noting that eviction rates tend to be higher when landlords are corporations capable of utilizing such software.
The software in question, which the Justice Department claims has a monopoly on rental management tools, is used to manage 3 million rental units across the United States, predominantly in Southern states.
“In a free market, these landlords would otherwise be competing independently to attract renters through pricing, discounts, concessions, lease terms, and other aspects of apartment leasing,” the Justice Department stated when announcing the charges.
“RealPage leverages this scheme and its extensive data collection to maintain a monopoly in the market for commercial revenue management software.”
