The US Department of Justice and eight state attorneys general have filed an antitrust lawsuit against RealPage, accusing the company of operating an illegal scheme to drive up rent prices across the country.
According to Inman, the lawsuit, filed in the US District Court for the Middle District of North Carolina, alleges that RealPage’s pricing algorithm enables landlords to share confidential information and align their rents, violating antitrust laws.
Attorney General Merrick Garland said the Justice Department will aggressively enforce the antitrust laws to protect the American people.
“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” Mr Garland said.
Deputy Attorney General Lisa Monaco said that by feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law
“Training a machine to break the law is still breaking the law,” Ms Monaco said.
The DOJ claims RealPage’s software acts as a sharing mechanism for landlords, allowing them to coordinate pricing instead of competing.
This lawsuit marks the first major antitrust case targeting an algorithm, according to The New York Times.
RealPage, owned by private equity firm Thoma Bravo, has denied any wrongdoing.
The company’s spokeswoman, Jennifer Bowcock, said the company was disappointment with the DOJ’s decision.
She said the lawsuit “seeks to scapegoat pro-competitive technology that has been used responsibly for years.”
The lawsuit comes at a time when the apartment market is experiencing high vacancy rates due to increased construction.
The DOJ argues that in a free market, landlords should compete on price and quality to attract renters.
The complaint uses RealPage’s own marketing language to outline how the company pitched its services to large landlords as a way to avoid competition.
The DOJ seeks an injunction to stop RealPage from implementing its information-sharing framework and to end what they claim is the company’s monopoly.
RealPage sold its software to landlords as a tool to maximise rent prices, even in markets where vacancy rates might typically drive prices down.
The DOJ said this practice frustrates natural market forces and harms renters.
The lawsuit represents a significant challenge to the use of algorithms in pricing strategies within the real estate industry.
It also raises questions about the line between technological innovation and anti-competitive practices in the digital age.
