If you’ve rented an apartment in the U.S. in recent years, you may have felt like the game was rigged: Prices were creeping up not just at your building, but at other buildings around the city, seemingly in lockstep. A new civil lawsuit filed today by the U.S. Department of Justice alleges that in many cases, it’s not just in your head—it’s one company’s algorithm that’s to blame.
That company is RealPage, a Texas-based company that provides commercial revenue management software to landlords. In other words, it helps set apartment prices. But it does so, the DOJ alleges in its lawsuit, by effectively helping its clients cheat; landlords input rents and lease terms into the system, and the RealPage algorithm in turn spits out a suggested price that enables coordination and stifles competition.
“By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a centuries-old law through systematic coordination of rent pricing,” Deputy Attorney General Lisa Monaco said in a statement.
RealPage’s reach is broad. It controls 80 percent of the market for such software, which in turn is used to set the prices of about 3 million units nationwide, according to the DOJ. It already faces multiple lawsuits, including one from the state of Arizona and another in Washington, D.C., where RealPage software is allegedly used to price more than 90 percent of units in large apartment buildings. RealPage’s algorithmic pricing first gained wider attention when a 2022 ProPublica investigation revealed how the company’s YieldStar software works.
The Justice Department’s civil lawsuit, which has been joined by attorneys general from eight states, is a significant escalation in the legal action against the company. It’s also a first for the Justice Department, according to officials who spoke on background during a call to discuss the complaint. While the government has previously filed criminal charges against an Amazon seller for algorithm-driven price fixing, this is the first civil case in which the algorithm itself was effectively the vehicle for the violation, the Justice Department official said.
The complaint itself quotes RealPage executives who allegedly acknowledge anticompetitive aspects of their product. “There is more good in everyone succeeding than in actually trying to compete with each other in a way that actually puts pressure on the entire industry,” one RealPage executive is said to have written.
RealPage has repeatedly denied all allegations of antitrust violations, even going so far as to publish a six-page digital pamphlet claiming to tell “The Real Story” about its products, along with an extensive FAQ page on a dedicated public policy website. “Attacks on the industry’s revenue management are based on demonstrably false information,” a section of that site states. “RealPage revenue management software benefits both housing providers and residents.”
The Justice Department disagrees. “Algorithms don't exist in a lawless zone,” Monaco said at a press conference to discuss the case. “Training a machine to break the law is still breaking the law.”
The Justice Department has hired technologists and data scientists in recent years, better enabling it to “interrogate the code,” as several officials described the investigative process.
This is a developing story. Check back for updates.
