US prosecutors unveiled sweeping antitrust charges on Friday against a property management software company they allege uses algorithms to enable collusion between landlords, harming renters in several US markets.
The Justice Department, along with eight US states, filed a lawsuit against Texas-based RealPage, which maintains an alleged “monopoly” on commercial revenue management software, according to a DOJ press release.
RealPage vowed to “vigorously” fight the suit, which it called baseless.
The complaint, filed in US District Court in North Carolina, alleges that RealPage’s algorithmic software receives real-time pricing data and displays job vacancies and other sensitive non-public data from competing landlords. The software then creates pricing recommendations, allowing landlords to charge more than they otherwise would, hurting consumers.
The lawsuit marks the first time U.S. prosecutors have targeted anticompetitive behavior centered on computer algorithms, a U.S. Justice Department official said.
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Attorney General Merrick Garland described RealPage’s behavior as “classic price fixing,” calling competition between landlords a critical protection for renters.
“Everybody knows the rent is very high, and we claim that’s one of the reasons,” Garland told a news conference.
A spokeswoman for RealPage called the lawsuit a “distraction” from “the fundamental” issues driving rent inflation, including a lack of housing supply and high mortgage rates.
“We are disappointed that, after many years of education and cooperation on antitrust matters regarding RealPage, the DOJ has chosen this time to pursue a lawsuit that seeks to destroy the pro-competitive technology that has been used responsibly for years,” he said. RealPage.
“We believe the claims being made by the Department of Justice are without merit and will do nothing to make housing more affordable.”
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The lawsuit cites internal documents, including a comment by a RealPage executive that “there’s a greater good in everyone succeeding than actually trying to compete with each other in a way that actually keeps the entire industry down.”
Assistant Attorney General Jonathan Kander credited the Justice Department’s hiring of data science experts that allowed the department to examine how the technology can be used as a means to questionable ends in rental and other markets.
“Algorithms process much more information, much faster, than humans ever could,” Kanter said. “The technical capabilities of software can enhance a competitor’s ability to extract profits, tip the market in favor of monopolies, and undermine the competitive process.”
RealPage serves companies representing three million residential units, with a particularly strong presence in the Sunbelt and the US South, US Justice officials said during a media briefing.
In the Raleigh, North Carolina, market, RealPage accounted for about 40 percent of the rental market, U.S. officials said. The company’s penetration is as high as 60 percent in some markets, officials said.
Source: AFP