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Justice Department Files Landmark Antitrust Lawsuit Against RealPage, Alleging Algorithmic Price-Fixing

1 Minute ReadJustice Department Files Landmark Antitrust Lawsuit Against RealPage, Alleging Algorithmic Price-Fixing

WASHINGTON, D.C. — August 23, 2024 — The Justice Department, in coordination with eight states, filed a sweeping antitrust lawsuit on Friday against the real estate software company RealPage, alleging that its algorithm-driven platform facilitated a far-reaching price-fixing conspiracy among landlords, artificially inflating rents across the nation.

The lawsuit, joined by attorneys general from North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, accuses RealPage of orchestrating a scheme that enabled property owners to synchronize rent increases, circumventing the competitive forces that traditionally regulate housing markets. According to the complaint, this collusion resulted in rents being set higher than market conditions would have allowed, affecting millions of Americans.

The case, announced by Attorney General Merrick Garland, marks the first major civil antitrust action in which an algorithm stands at the center of the allegations. “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 in a statement. “This lawsuit underscores our commitment to ensuring that technology serves the public interest, rather than being used as a tool for exploitation.”

RealPage, a major player in the real estate technology sector, offers a range of software solutions designed to optimize property management operations. However, the Justice Department alleges that the company’s revenue management software went beyond optimization, acting as a conduit for landlords to engage in unlawful coordination, driving up rents across large swaths of the rental market.

According to the complaint, RealPage’s software provided landlords with a platform that allowed them to exchange sensitive pricing information, including future rent increases, thereby enabling them to set rents at levels above what competitive market forces would justify. The lawsuit claims that this practice not only harmed renters but also distorted the overall housing market by creating an environment where competition was stifled.

Jennifer Bowcock, a spokeswoman for RealPage, strongly defended the company’s practices, stating that the software was “purposely built to be legally compliant” and that RealPage would “vigorously contest the allegations.” Ms. Bowcock emphasized that the software’s design was intended to help property managers make data-driven decisions that reflect true market conditions, rather than manipulate pricing.

The lawsuit raises critical questions about the role of technology in the modern economy, particularly as more industries rely on complex algorithms to set prices, allocate resources, and manage operations. Antitrust experts suggest that the outcome of this case could set a precedent for how the courts address the intersection of technology and competition law.

“The RealPage case could be a watershed moment in antitrust enforcement,” said Eleanor Fox, a professor at New York University School of Law. “If the government prevails, it could lead to increased scrutiny of algorithms and other forms of automated decision-making that impact markets.”

For millions of renters across the country, the stakes are high. The lawsuit contends that the alleged price-fixing conspiracy has already cost American renters billions of dollars in inflated rent payments, exacerbating the affordability crisis that has plagued many urban areas.

The Justice Department’s case against RealPage is expected to be closely watched, not only by the real estate industry but also by tech companies and regulators worldwide. As the trial unfolds, it will likely ignite broader debates about the role of artificial intelligence and algorithms in shaping the economy, and whether existing legal frameworks are sufficient to regulate their influence.

This story is developing. Please check back for updates.

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