Anyone that collects on rental debt or works with landlords or apartment building owners likely has heard of RealPage. RealPage is revenue management software the real estate companies use which contains an algorithm that uses information from all of its clients to determine what rents to set for their buildings. On Friday, the Department of Justice and eight state Attorneys General filed suit against the company, accusing it of violating antitrust laws by allowing landlords to coordinate rental price hikes. This case marks the first major antitrust lawsuit where the use of an algorithm to manipulate pricing is central, highlighting the growing concern over the role of technology in market manipulation.
The background: RealPage’s software, particularly its YieldStar and AI Revenue Management (AIRM) products, is used by landlords to set rental prices based on sensitive, nonpublic data collected from competing landlords.
- The lawsuit, filed in the Middle District of North Carolina, claims that RealPage’s software created a price-fixing conspiracy that artificially inflated rents beyond what market conditions would dictate. According to the complaint, RealPage’s algorithm used data from about 16 million rental units to recommend higher rents, which landlords frequently accepted, leading to a nationwide impact on rental prices.
- The DOJ’s complaint highlights that RealPage’s software not only facilitated higher prices but also monitored compliance by landlords, pushing them to adopt rent increases even in declining markets. This practice, the DOJ argues, stifles competition, depriving renters of the benefits of a free and competitive market.
RealPage, owned by private equity firm Thoma Bravo, has stated it will “vigorously” defend itself against these claims. The company maintains that its software is legally compliant and that landlords are not required to follow the price recommendations provided by YieldStar and AIRM. Attorney General Merrick Garland emphasized that Americans should not face inflated rents due to unlawful schemes.
