If you’ve rented an apartment in the United States in the past few years, you may have had the feeling that the game is rigged: Prices have been rising not just in your building, but in others across the city, seemingly in lockstep. A new civil lawsuit filed today by the U.S. Department of Justice alleges that in many cases, it’s not just in your head—and that a single company’s algorithm is to blame.
That company is RealPage, a Texas-based company that provides commercial revenue management software to landlords. In other words, it helps price apartments. But the DOJ alleges in its lawsuit that the company actually helps its customers cheat; landlords input rents and lease terms into the system, and RealPage’s algorithm in turn generates suggested prices that enable coordination and stifle competition.
“By feeding sensitive data into a complex algorithm powered by artificial intelligence, RealPage found a modern way to violate centuries-old laws by systematically manipulating rental housing prices,” Deputy Attorney General Lisa Monaco said in a statement.
RealPage’s reach is extensive. According to the Department of Justice, the company controls 80 percent of the market for its software, and is used to price about three million units nationwide. The company has faced numerous lawsuits, including one from the state of Arizona and another one in Washington, DCwhere RealPage software is said to be used to value more than 90 percent of the apartments in large apartment buildings. RealPage’s valuation algorithms first attracted wider attention when ProPublica Investigation 2022 reveals how the company’s YieldStar software works.
The DOJ’s civil lawsuit, which is joined by the attorneys general of eight states, is a significant escalation of legal action against the company. It is also the DOJ’s first, according to officials speaking on the call to discuss the complaint. Although the government has previously filed criminal charges fee against an Amazon seller for algorithmic price fixing, the first civil lawsuit in which the algorithm itself, according to a Justice Department official, was actually the vehicle for the violation.
The complaint quotes RealPage executives as acknowledging the anticompetitive aspects of the product. “It’s better for everyone to succeed than to try to compete with each other in a way that actually brings the entire industry down,” a RealPage executive allegedly wrote.
RealPage has repeatedly denied any allegations of antitrust violations, even publishing a six-page digital flyer The company claims to tell “the real story” about its products, along with an extensive FAQ page on a dedicated public policy website. “Attacks on the revenue management industry are based on blatant misinformation,” reads part of that website. “RealPage revenue management software benefits both home owners and homeowners.”
The Justice Department disagrees. “Algorithms do not exist in a lawless zone,” Monaco said at a press conference to discuss the case. “Training a machine to break the law is still breaking the law.”
The Justice Department has spent years recruiting technology experts and data scientists to better “interrogate code,” as multiple officials describe the investigation.
This is a developing story. Please check back for updates.
