The recent unveiling of sweeping antitrust charges against RealPage, a property management software company, has brought to light allegations of collusion among landlords using sophisticated algorithms. This groundbreaking case, filed by the Department of Justice and eight US states, sheds light on how technology can be manipulated to harm consumers in the rental market.
According to the civil lawsuit, RealPage allegedly maintains a “monopoly” over commercial revenue management software, allowing landlords to use algorithmic software to set prices and project vacancies based on sensitive non-public data from competing landlords. This practice, the lawsuit claims, enables landlords to charge higher prices, ultimately harming renters across various US markets.
The Legal Battle
RealPage has vehemently denied the allegations, vowing to “vigorously” fight the lawsuit, which it has deemed groundless. The company argues that the lawsuit is a distraction from more pressing issues such as housing supply shortages and high mortgage rates. Despite RealPage’s defense, the Department of Justice is pushing forward with what it describes as a landmark case targeting anticompetitive behavior facilitated by computer algorithms.
Attorney General Merrick Garland characterized RealPage’s conduct as “classic price fixing,” emphasizing the critical role of competition in protecting renters. The lawsuit highlights the detrimental effects of algorithmic collusion on consumers, with increased rental prices being one of the main concerns. By targeting RealPage’s algorithmic software, US prosecutors are aiming to safeguard consumers’ interests and promote fair competition in the rental market.
Assistant Attorney General Jonathan Kanter underscored the importance of data science expertise in uncovering anticompetitive practices facilitated by technology. By hiring data science experts, the Department of Justice has been able to delve deeper into how algorithms can be manipulated to favor monopolies and undermine the competitive process. Kanter emphasized the rapid processing capabilities of algorithms, which can tip the market in favor of certain players and harm overall market competition.
RealPage serves companies that manage three million housing units, with a particularly strong presence in the US Sunbelt and the South. In markets like Raleigh, North Carolina, RealPage accounts for a significant portion of the rental market, raising concerns about the company’s market dominance. US Justice officials highlighted RealPage’s penetration in various markets, with some reaching as high as 60 percent, underscoring the potential impact of the company’s alleged anticompetitive practices.
The antitrust charges against RealPage represent a significant milestone in addressing collusion facilitated by algorithmic software in the rental market. As the legal battle unfolds, the outcome of this case will set a precedent for regulating the use of technology in fostering fair competition and protecting consumer interests. By shedding light on the potential pitfalls of algorithmic collusion, this case serves as a reminder of the importance of accountability and transparency in the digital age.
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