If you’ve rented an apartment in the United States in the past few years, you may have felt like the game was rigged: Your property, as well as others in your city, have seen prices rise in seemingly lockstep. A new civil lawsuit filed today by the US Department of Justice argues that in many cases, it’s not just your imagination — a single company’s algorithm is to blame.
The company is Texas-based RealPage, which provides commercial revenue management software to landlords. In other words, it helps them price their apartments. But the Justice Department alleges in its lawsuit that the company is effectively helping its clients cheat: Landlords input rents and lease terms into the system, and RealPage’s algorithms spit out recommended prices that allow for adjustments and stifle competition.
“By feeding sensitive data into sophisticated algorithms powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematically rigging rental home prices,” Deputy Attorney General Lisa Monaco said in a statement.
RealPage’s influence is far-reaching. According to the Department of Justice, the company controls 80% of the market for such software, and its software is used to set the prices of about 3 million homes across the United States. The company already faces multiple lawsuits, including from Arizona and Washington, D.C., that allege that RealPage software is used to set the prices of more than 90% of the units in large apartment complexes. RealPage’s algorithmic pricing first drew widespread attention when a 2022 ProPublica investigation exposed how the company’s YieldStar software worked.
The Justice Department’s civil lawsuit, which also includes eight state attorneys general, significantly expands its legal actions against the company and is a first for the department, according to officials who spoke privately during a conference call to discuss the charges. While the government has previously brought criminal charges against Amazon sellers for using algorithms to fix prices, this is the first civil lawsuit in which the algorithm itself is effectively the vehicle for violations, Justice Department officials said.
The complaint itself quotes RealPage executives as purportedly acknowledging the anti-competitive aspects of their product: “It’s in everyone’s interest to be successful, rather than trying to compete with each other in a way that actually undermines the entire industry,” one RealPage executive reportedly wrote.
RealPage has repeatedly denied the allegations of antitrust violations, even publishing a six-page digital brochure telling the “truth” about its product, as well as a detailed FAQ page on a dedicated public policy website. “The industry’s attacks on revenue management are clearly based on misinformation,” one section on the site reads. “RealPage’s revenue management software benefits both home providers and residents.”
The Justice Department disagrees. “Algorithms do not exist in a lawless zone,” Monaco said at a press conference discussing the case. “Training a machine to break the law is still against the law.”
The Justice Department has been hiring more engineers and data scientists over the past few years so they can “look at the code,” as several officials have described the investigative process.
This is a developing story, please check back for updates.
