The Justice Division filed an antitrust lawsuit Friday in opposition to actual property software program firm RealPage Inc., accusing it of an unlawful scheme that enables landlords to coordinate to hike rental costs.
The lawsuit, filed alongside attorneys normal in states together with North Carolina and California, alleges the corporate is violating antitrust legal guidelines via its algorithm that landlords use to get beneficial rental costs for flats.
The algorithm permits landlords to align their costs and keep away from competitors that will in any other case maintain rents down, Justice Division officers mentioned. The grievance quotes one RealPage govt as saying “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”
In an announcement, Legal professional Basic Merrick Garland mentioned, “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.”
Attorneys normal in a number of states have individually sued RealPage alleging an unlawful price-fixing scheme over its algorithmic pricing software program.
In an announcement, RealPage mentioned the Justice Division’s claims have been “devoid of merit and will do nothing to make housing more affordable.”
“We are disappointed that, after multiple years of education and cooperation on the antitrust matters concerning RealPage, the DOJ has chosen this moment to pursue a lawsuit that seeks to scapegoat pro-competitive technology that has been used responsibly for years,” the corporate mentioned.
Using knowledge to assist property managers set their rents isn’t new or, on its face, unlawful. However state prosecutors argue that RealPage is completely different. In response to lawsuits filed prior to now yr by the attorneys normal for Arizona and Washington, D.C., RealPage doesn’t simply use publicly obtainable knowledge — it makes use of confidential knowledge that RealPage’s shoppers have agreed to privately share to assist RealPage’s software program to find out the very best value.
That quantities to cartel-like unlawful value collusion, prosecutors say. Solely this time, as an alternative of cartel members assembly inside a proverbial “smoke-filled room,” the price-fixing is finished by AI, they are saying.
RealPage got here underneath scrutiny after a 2022 ProPublica investigation into the corporate’s observe urged that it might be in charge for among the fast will increase in housing prices. Since then, RealPage has drawn the ire of Democratic lawmakers, together with Sen. Amy Klobuchar, who in February launched a invoice to bar corporations from utilizing algorithms to collude and repair costs.
And final week, in a speech in Raleigh, North Carolina, Democratic presidential nominee Vice President Kamala Harris pledged to crack down on “corporate landlords (who) collude with each other to set artificially high rental prices (by) using algorithms and price-fixing software.”
The case is the newest instance of the Biden administration’s aggressive antitrust enforcement.
The Justice Division sued Apple in March and in Could introduced a sweeping lawsuit in opposition to Ticketmaster and its proprietor, Dwell Nation Leisure. Antitrust enforcers have additionally opened investigations into the roles Microsoft, Nvidia and OpenAI have performed within the synthetic intelligence increase.
