San Diego weighs rent algorithm ban, joining national fight over pricing software
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San Diego's City Council is scheduled to vote Tuesday on a ban of rent-pricing algorithms used by landlords that Councilmember Sean Elo-Rivera alleges inflates rents through "collusion and price fixing."
Why it matters: An analysis last year found renters in buildings that use rent-pricing algorithms paid an additional $99 per month.
Driving the news: Elo-Rivera's proposal, backed by City Attorney Heather Ferbert, is based on a similar policy adopted in San Francisco last year and a state Senate bill.
- The proposal would ban software that uses "one or more algorithms to perform calculations of nonpublic competitor data" to advise landlords on either rental rates or occupancy levels.
Catch-up quick: The Department of Justice and California Attorney General Rob Bonta last year sued RealPage, which offers the product as part of software it sells to large landlords and property managers.
- Earlier this month, RealPage sued Berkeley over its attempt to ban algorithmic pricing, calling the policy part of "an intentional campaign of misinformation."
- Philadelphia and Minneapolis have passed bans and Portland is considering one, after a 2022 ProPublica investigation exposed the practice.
What they're saying: "What seems clear to me is that the software is being used as a thin veil for what is obviously collusion and price fixing," Elo-Rivera said.
- The city needs to pass a ban, he said, because ongoing lawsuits could take years to play out.
How it works: The city's proposed ordinance does not apply to products that aggregate existing public information into reports that landlords could use to determine rents or occupancy rates.
- Elo-Rivera said the use of nonpublic information distinguishes the product from longstanding trade publications that serve as a guide to industry professionals.
- "If two or more property owners took that guide and got in a room together to set prices, that would be a violation," he said. "And If they sent in an agent to set prices, that would also be illegal. The software is doing just that."
The other side: RealPage said an analysis by the Biden administration falsely assumed that all landlords that use the product set coordinated rents.
- The company filed a motion to dismiss the DOJ suit, arguing it has not shown any anticompetitive effects of its product.