Allegations of Illegal Scheme to Hike Rental Prices
Lawsuit alleges that RealPage Inc. has been involved in an illegal scheme that enables landlords to coordinate and hike rental prices. The scheme, according to the lawsuit, allows landlords to align their prices and avoid competition, which would otherwise keep rents down. This has resulted in higher rental prices for consumers.
The lawsuit quotes a RealPage executive as saying that “there is greater good in everybody succeeding versus importantly trying to compete against one another in a way that actually keeps the entire industry down.” This statement suggests that the company’s algorithm is designed to facilitate price coordination among landlords, rather than promoting competition.
Violation of Antitrust Laws Through Algorithmic Pricing Software
The Justice Department believes that RealPage’s algorithmic pricing software violates antitrust laws. The software, which uses confidential data shared by RealPage’s clients, allows landlords to determine the highest price for their rentals. This, according to prosecutors, amounts to cartel-like illegal price collusion.
The use of data to help property managers set their rents is not new, but state prosecutors argue that RealPage’s software goes beyond what is legally acceptable. By using confidential data, RealPage’s software enables landlords to coordinate prices and avoid competition, resulting in higher rental prices for consumers.
RealPage’s algorithmic pricing software has come under scrutiny after a 2022 ProPublica investigation suggested that it could be responsible for rapid increases in housing costs. Since then, the company has faced criticism from lawmakers, including Sen. Amy Klobuchar, who introduced a bill to bar companies from using algorithms to collude and fix prices.
Enabling Landlords to Coordinate and Avoid Competition
While the algorithm provided by RealPage Inc. may seem like a useful tool for landlords to determine rental prices, the Justice Department alleges that it has a more sinister purpose. The algorithm allows landlords to align their prices and avoid competition that would otherwise keep rents down. This coordination enables landlords to hike rental prices, ultimately harming renters. The complaint quotes a RealPage executive as saying that there is greater good in everybody succeeding versus competing against one another, implying that the company’s goal is to help landlords succeed at the expense of renters.
The Justice Department’s lawsuit argues that RealPage’s algorithm is violating antitrust laws by enabling landlords to coordinate and avoid competition. This lack of competition leads to higher rental prices, which can have devastating effects on low-income families and individuals who are already struggling to make ends meet. By allowing landlords to coordinate their prices, RealPage’s algorithm is perpetuating a system that prioritizes profits over people.
Using Confidential Data to Determine Highest Prices, Amounting to Illegal Price Collusion
Some critics argue that RealPage’s use of confidential data to determine rental prices is a key factor in its alleged illegal price collusion. According to lawsuits filed by attorneys general in Arizona and Washington, D.C., RealPage uses confidential data shared by its clients to help its software determine the highest price. This use of confidential data allows RealPage to facilitate price-fixing among its clients, leading to artificially high rental prices.
RealPage’s use of confidential data is a key aspect of its alleged antitrust violations. By using this data to determine the highest price, RealPage is enabling its clients to collude and fix prices, rather than competing with each other to offer the best rates. This illegal price collusion has serious consequences for renters, who are forced to pay higher prices for housing due to RealPage’s alleged anticompetitive practices. By using AI to facilitate price-fixing, RealPage has found a new way to break the law, according to Attorney General Merrick Garland. As the Justice Department’s lawsuit against RealPage moves forward, it remains to be seen how the company will respond to these allegations and what consequences it may face for its alleged antitrust violations.
