Federal prosecutors have reached a settlement with RealPage Inc., a Texas-based software company, to curb the alleged use of its rent-pricing algorithm for "algorithmic collusion." The agreement aims to prevent landlords from using confidential data to coordinate rent hikes, a practice critics argue inflated housing costs for renters nationwide. While RealPage admits no wrongdoing and faces no damages, the settlement, pending judicial approval, restricts its ability to use real-time data for price recommendations, requiring any nonpublic data used to be at least a year old.
Key Takeaways
- RealPage Inc. settles with the Department of Justice to limit its rent-pricing algorithm.
- The settlement aims to prevent "algorithmic collusion" and promote market competition.
- RealPage will no longer use real-time confidential data for price recommendations.
- Critics argue the settlement is insufficient and allows loopholes.
- Several states and cities are enacting their own regulations against rent-setting software.
The Antitrust Lawsuit
The yearlong antitrust lawsuit, launched by the Biden administration, accused RealPage of facilitating illegal price-fixing among landlords. The software provides daily rent recommendations, and critics contend that by having access to a vast amount of confidential landlord data, it enables clients to maximize rental prices. Gail Slater, DOJ antitrust chief, stated that the settlement replaces "competition with coordination" and that renters "paid the price."
Settlement Terms and Criticisms
Under the proposed settlement, RealPage’s algorithm can no longer be trained on real-time, nonpublic data. The only nonpublic data allowed for training must be at least one year old. Slater emphasized that this change would lead to "more real competition in local housing markets" and rents set by the market, not a "secret algorithm."
However, some observers, like Lee Hepner of the American Economic Liberties Project, have criticized the deal. Hepner believes the settlement has loopholes and that RealPage can still influence the rental market using public data. He also pointed out that RealPage is not required to pay damages, unlike many companies that have faced penalties for their use of the software.
Broader Regulatory Landscape
This settlement comes amidst a growing wave of regulatory action against rent-setting software. In recent months, numerous property management companies, including the nation’s largest landlord, Greystar, have reached settlements in class-action lawsuits related to their use of RealPage. Furthermore, California and New York have enacted laws targeting such software, and cities like Philadelphia and Seattle have passed ordinances against the practice. Ten states that joined the DOJ’s lawsuit are not part of this settlement and can continue their legal pursuits independently.