U.S. accuses RealPage of helping landlords collude to raise rents
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The Justice Department filed an antitrust lawsuit against RealPage on Aug. 23. Photo: Pavlo Gonchar/SOPA Images/LightRocket via Getty Images
The Department of Justice on Friday filed an antitrust lawsuit against RealPage, a property management software company, for an alleged "unlawful scheme" to reduce competition in the apartment rental market and secure a monopoly for itself.
Why it matters: RealPage uses a trove of data to help some of the country's biggest landlords set apartment rental prices. According to the suit, it's helping them to artificially inflate prices for renters all across the county.
Driving the news: The complaint argues RealPage drives up rental costs across the board by pooling the rates and lease terms of landlords who should be competing and using its algorithm to recommend the rents they then charge.
- The attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington were also plaintiffs.
State of play: RealPage has an 80% market share in commercial revenue management software for multi-family units, the DOJ said in a statement.
- "In a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, concessions, lease terms and other dimensions of apartment leasing," the statement said.
- There are mechanisms within the software to encourage landlords to accept the prices recommended by its algorithm, which "tends to maximize price increases, minimize price decreases, and maximize landlords' pricing power," per the suit.
The other side: RealPage's software was built to be legally compliant, Jennifer Bowcock, a RealPage spokesperson, said.
- The company has collaborated with the Justice Department on antitrust matters, per Bowcock.
- "It is merely a distraction from the fundamental economic and political issues driving inflation throughout our economy — and housing affordability in particular — which should be the focus of policymakers in Washington, D.C.," Bowcock said.
Our thought bubble, from Axios' Ashley Gold: Both the DOJ and the FTC have been warning that they won't hesitate to bring action against companies using algorithms if they think they're breaking the law.
- The suit also follows a pattern of agencies bringing antitrust suits against tech companies.
Flashback: A lawsuit filed last year in D.C. similarly accused RealPage of being responsible for higher rents across the board.
- D.C. Attorney General Brian Schwalb dubbed 14 of the city's biggest landlords a "cartel" for allegedly inflating rent costs based on RealPage's calculations.
Zoom out: 74% of Americans are worried about housing affordability, per a recent survey from the National Housing Conference and other organizations.
- In July, President Biden called on Congress to pass legislation requiring corporate landlords to cap rent increases at 5%.
- It has become a focal point of Vice President Harris' presidential campaign. She announced a plan earlier this month that would provide up to $25,000 in downpayment assistance to first-time homebuyers with a two-year record of consistent on-time rent payments.
Go deeper: Big landlords are colluding to raise rents, D.C. lawsuit alleges
Editor's note: This story has been updated with details throughout.
