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If you’ve rented an apartment in the United States in the past few years, you may have felt like the game was rigged: Your property, as well as others in your city, have seen prices rise in seemingly lockstep. A new civil lawsuit filed today by the US Department of Justice argues that in many cases, it’s not just your imagination — a single company’s algorithm is to blame.
The company is Texas-based RealPage, which provides commercial revenue management software to landlords. In other words, it helps them price their apartments. But the Justice Department alleges in its lawsuit that the company is effectively helping its clients cheat: Landlords input rents and lease terms into the system, and RealPage’s algorithms spit out recommended prices that allow for adjustments and stifle competition.
“By feeding sensitive data into sophisticated algorithms powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematically rigging rental home prices,” Deputy Attorney General Lisa Monaco said in a statement.
RealPage’s influence is far-reaching: The Justice Department says it controls 80% of the market for such software, using its share to set the prices of about 3 million devices nationwide. The company is already facing multiple lawsuits, including one from the state of California. Arizona And the other one is Washington DCIn 2013, RealPage software was reportedly used to set the prices of over 90% of the units in large apartment complexes. RealPage’s algorithmic pricing first attracted widespread attention in 2022 ProPublica Investigations The company revealed how its YieldStar software works.
The Justice Department’s civil lawsuit, which also includes eight state attorneys general, represents a significant expansion of its legal actions against the company and is the department’s first, according to officials who spoke privately on a conference call to discuss the suit. The government had previously filed criminal charges. Fee The civil lawsuit, which accuses Amazon sellers of using algorithms to fix prices, is the first in which the algorithm itself is in fact the vehicle for the violation, according to Justice Department officials.
The complaint itself quotes RealPage executives as purportedly acknowledging the anti-competitive aspects of their product: “It’s in everyone’s interest to be successful, rather than trying to compete with each other in a way that actually undermines the entire industry,” one RealPage executive reportedly wrote.
RealPage has repeatedly denied the allegations of antitrust violations and released a six-page digital version. Brochure The company claims to tell “the real story” about its products, and even has an extensive FAQ page on its dedicated public policy website. “Industry attacks on revenue management are clearly based on misinformation,” one section on the site reads. “RealPage revenue management software delivers benefits to both housing providers and residents.”
The Justice Department disagrees. “Algorithms don’t exist in a lawless zone,” Monaco said at a press conference discussing the case. “Training a machine to break the law is still breaking the law.”
This is a developing story, please check back for updates.
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