The Justice Department and eight states have filed a lawsuit against RealPage, the company responsible for a widely-used software that assists landlords in setting rental prices. The lawsuit alleges that RealPage’s rent recommendation algorithm not only drives up prices but also eliminates competition in the apartment leasing market. According to the complaint, RealPage obtains nonpublic rental price information from competing landlords who utilize the software, feeding this data into its algorithmic pricing software to provide rent rate suggestions.
The DOJ claims that RealPage goes beyond providing recommendations, as it also influences landlords’ other policies, pushing for an end to concessions and discounts for renters. Landlords are given the option to “auto accept” the suggested rent adjustments, effectively outsourcing their pricing function to RealPage. This eliminates the independent decision-making process in a competitive marketplace, as RealPage’s algorithm dictates the pricing strategy for multiple landlords simultaneously.
RealPage’s stronghold on commercial revenue management software for multi-family dwellings is highlighted in the lawsuit, with the company commanding an estimated 80 percent market share. The DOJ alleges that RealPage’s agreements with landlords, coupled with the sensitive data it receives from them, give the company an unfair competitive advantage. By controlling pricing strategies and rental policies across a significant portion of the market, RealPage is accused of stifling competition and depriving renters of affordable leasing options.
RealPage has been under scrutiny by the Justice Department for some time, with this lawsuit representing the latest development in the investigation. The company is facing serious allegations of anti-competitive behavior and price fixing, as well as using proprietary data to maintain its dominant position in the market. The outcome of this legal battle could have far-reaching implications for the rental industry and the technology companies that provide services to landlords and property managers.
The lawsuit against RealPage highlights the potential consequences of monopoly power in the rental market and the importance of maintaining fair competition for the benefit of both landlords and renters. The outcome of this legal battle will undoubtedly shape the future of revenue management software and pricing strategies in the multi-family housing sector.