In the event you’ve rented an house within the US prior to now a number of years, you’ll have had the sense that the sport was rigged: Costs creep up not solely at your constructing however at others all through town, seemingly in lockstep. A brand new civil lawsuit introduced by the US Division of Justice right now alleges that in lots of circumstances it’s not simply in your head—and {that a} single firm’s algorithm is guilty.
That firm is RealPage, a Texas-based agency that gives industrial income administration software program for landlords. In different phrases, it helps set the costs of flats. Nevertheless it does so, the DOJ alleges in its lawsuit, by successfully serving to its purchasers cheat; landlords feed rental price and lease phrases into the system, and the RealPage algorithm in flip spits out a recommended value that allows coordination and hinders competitors.
“By feeding delicate information into a complicated algorithm powered by synthetic intelligence, RealPage has discovered a contemporary strategy to violate a century-old legislation via systematic coordination of rental housing costs,” deputy lawyer common Lisa Monaco mentioned in an announcement.
RealPage’s attain is broad. It controls 80 p.c of the marketplace for software program of its form, which in flip is used to set costs of round 3 million items throughout the nation, in keeping with the DOJ. It already faces a number of lawsuits, together with one from the state of Arizona and one other in Washington, DC, the place RealPage software program is allegedly used to cost greater than 90 p.c of items in massive house buildings. RealPage’s algorithmic pricing first gained broader consideration when a 2022 ProPublica investigation detailed how the corporate’s YieldStar software program works.
The DOJ civil lawsuit, which was joined by the attorneys common of eight states, is a major escalation in authorized motion towards the corporate. It’s additionally a primary for the DOJ, in keeping with officers talking on background throughout a name to debate the criticism. Whereas the federal government had beforehand filed felony charges towards an Amazon vendor for algorithm-enabled price-fixing, that is the primary civil motion through which the algorithm itself, the Justice Division official says, was successfully the technique of the violation.
The criticism itself quotes RealPage executives allegedly acknowledging anticompetitive elements of its product. “There’s better good in all people succeeding versus primarily making an attempt to compete towards each other in a approach that truly retains your entire trade down,” one RealPage govt allegedly wrote.
RealPage has repeatedly denied any allegations of antitrust violations, going as far as to publish a six-page digital pamphlet that claims to inform “the Actual Story” about its merchandise, together with an intensive FAQ web page on a devoted public coverage web site. The corporate didn’t instantly reply to a request for remark. “Assaults on the trade’s income administration are primarily based on demonstrably false info,” one part of that web site reads. “RealPage income administration software program advantages each housing suppliers and residents.”
“We’re disillusioned that, after a number of years of schooling and cooperation on the antitrust issues regarding RealPage, the DOJ has chosen this second to pursue a lawsuit that seeks to scapegoat pro-competitive expertise that has been used responsibly for years,” mentioned Jennifer Bowcock, senior vice chairman of communications and artistic at RealPage, in an emailed assertion. “RealPage’s income administration software program is purposely constructed to be legally compliant, and we’ve a protracted historical past of working constructively with the DOJ to indicate that.”
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