If you’ve rented an apartment in the United States in recent years, you may have had the feeling that the game was rigged: prices are rising not only in your building, but in others around the city, seemingly in unison. A new civil lawsuit filed today by the U.S. Department of Justice argues that in many cases, it’s not just a matter of imagination — it’s a single company’s algorithm that’s to blame.
That company is RealPage, a Texas-based firm that provides commercial revenue management software for landlords. In other words, it helps set apartment prices. But it does so, the Justice Department alleges in its lawsuit, by helping its clients cheat: Landlords input their rent price and lease terms into the system, and RealPage’s algorithm, in turn, comes up with a suggested price that enables coordination and stymies competition.
“By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law by systematically coordinating rental prices for homes,” Assistant 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 prices for about three million units nationwide, according to the Justice Department. It already faces multiple lawsuits, including one from the state of Arizona and another in Washington, DCwhere RealPage software is reportedly used to price more than 90 percent of units in large apartment buildings. RealPage’s algorithmic pricing system first gained wider attention when a ProPublica Investigation 2022 explained how the company’s YieldStar software works.
The Justice Department’s civil suit, joined by attorneys general from eight states, is a significant escalation in legal action against the company. It is also the first time the Justice Department has filed one, according to officials who spoke anonymously during a call to discuss the complaint. While the government has previously filed a criminal complaint, charges against an Amazon seller for price-fixing using an algorithm, this is the first civil action in which the algorithm itself, the Justice Department official says, was effectively the means of the violation.
The complaint itself quotes RealPage executives who allegedly acknowledged anti-competitive aspects of their product. “There is a greater good in everyone succeeding rather than trying to compete with each other in a way that actually keeps the entire industry in ruin,” one RealPage executive allegedly wrote.
RealPage has repeatedly denied any allegations of antitrust violations, even going so far as to publish a six-page digital document. brochure that claims to tell “the real story” about its products, along with a lengthy FAQ page on a website dedicated to public policy. “Attacks on industry revenue management are based on demonstrably false information,” reads one section of that site. “RealPage revenue management software benefits both housing providers and residents.”
The Justice Department disagrees. “Algorithms do not exist in a law-free zone,” Monaco said at a news conference to discuss the case. “Training a machine to break the law is still breaking the law.”
The Justice Department has spent the past few years staffing technologists and data scientists to better equip them to “interrogate the code,” as several officials described the investigation process.
This is a developing story. Please check back for updates.
