A tech firm is being sued by the US government for allowing landlords in America to increase rents and stifle competition.

Texas-based RealPage Inc, which operates commercial revenue management software, is used by landlords to price apartments in the States. It also has a UK arm that provides build-to-rent, student housing, and co-living management solutions for landlords.

The US Justice Department, together with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, have filed a civil antitrust lawsuit against RealPage Inc. for a scheme that “harms millions of American renters” by violating Sections 1 and 2 of the Sherman Act.

The complaint alleges that RealPage contracts with competing landlords who agree to share non-public, competitively sensitive information about their apartment rental rates and other lease terms to train and run RealPage’s algorithmic pricing software. This software then generates recommendations, including on apartment rental pricing and other terms, for participating landlords based on their and their rivals’ competitively sensitive information.

Sensitive data

Deputy Attorney General Lisa Monaco says: “By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices — undermining competition and fairness for consumers in the process. Training a machine to break the law is still breaking the law.”

The complaint cites internal documents including RealPage acknowledging that its software is aimed at maximizing prices for landlords, refrenterring to its products as “driving every possible opportunity to increase price,” “avoid[ing] the race to the bottom in down markets,” and “a rising tide raises all ships”.

It adds that, armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, auto accept functionality and pricing advisors who monitor landlords’ compliance. As a result, RealPage’s software tends to maximize price increases, minimize price decreases, and maximize landlords’ pricing power.