The recent civil lawsuit filed by the US Department of Justice has shed light on a disturbing trend in the apartment rental industry. RealPage, a Texas-based firm that provides commercial revenue management software for landlords, stands accused of using its algorithm to manipulate rental prices. According to the lawsuit, RealPage’s algorithm enables landlords to coordinate prices and hinder competition, effectively creating a monopoly in the market. This has serious implications for renters across the country, as prices are artificially inflated by the algorithm.
RealPage’s dominance in the market is staggering, controlling 80 percent of the software used to set prices for around three million units nationwide. This level of control allows RealPage to influence the rental prices of a vast number of apartments, leading to higher costs for renters. The company’s software is so deeply entrenched in the industry that legal action against it has become necessary to address the issue of price manipulation.
The Impact of Algorithmic Pricing
The use of algorithms to set prices in the rental housing market has far-reaching consequences. By allowing landlords to input rental rate and lease terms into the system, the RealPage algorithm essentially dictates the prices of apartments. This not only limits competition but also results in higher costs for renters, who have no choice but to accept the prices set by the algorithm. The DOJ lawsuit is a significant step in addressing the harm caused by algorithmic pricing in the rental housing market.
Despite the allegations of antitrust violations, RealPage has vehemently denied any wrongdoing. The company has published extensive materials defending its practices and claiming that its revenue management software benefits both housing providers and residents. However, the DOJ remains unconvinced, emphasizing that algorithms are not above the law. RealPage’s attempts to downplay the impact of its algorithmic pricing are met with skepticism, as the evidence presented in the lawsuit paints a different picture.
The Role of the DOJ
The civil lawsuit filed by the DOJ represents a significant escalation in legal action against RealPage. By targeting the algorithm itself as the means of the violation, the DOJ is sending a clear message that such practices will not be tolerated. This marks a departure from previous cases where criminal charges were filed against individuals, rather than the algorithm itself. The DOJ’s focus on holding companies accountable for their use of algorithms to manipulate prices sets an important precedent for future cases.
The allegations against RealPage and its use of algorithmic pricing to manipulate apartment rental prices are a cause for concern. The company’s dominance in the market and its ability to control prices through its software highlight the need for regulatory intervention. The DOJ’s lawsuit is a step in the right direction towards addressing this issue and holding companies accountable for anticompetitive practices. Renters deserve transparency and fair competition in the housing market, and it is crucial that companies like RealPage are held to account for their actions.