Landlords could no longer rely on rent-pricing software to quietly track each other’s moves and push rents higher using confidential data under a settlement between RealPage Inc. and federal prosecutors aimed at ending alleged “algorithmic collusion.”
The Department of Justice announced the deal Monday after a yearlong antitrust lawsuit against the Texas-based software company. RealPage would not pay damages or admit wrongdoing under the agreement, which still requires a judge’s approval.
RealPage’s software gives daily price recommendations to landlords and property managers nationwide. While landlords can ignore the suggestions, critics say the software’s access to a large pool of nonpublic data let clients coordinate implicitly and extract the highest possible rents.
“RealPage was replacing competition with coordination, and renters paid the price,” DOJ antitrust chief Gail Slater said, noting the settlement avoids a costly trial. Under the proposed terms, RealPage can no longer use real-time nonpublic data to generate price recommendations. Any nonpublic data used to train the algorithm must be at least one year old.
Slater added in a video statement, “It means more real competition in local housing markets. It means rents set by the market, not by a secret algorithm.”
RealPage attorney Stephen Weissman said the company welcomed the DOJ’s decision to settle. He argued there has been “a great deal of misinformation about how RealPage’s software works” and said the company’s historical use of aggregated, anonymized nonpublic data “has led to lower rents, less vacancies, and more procompetitive effects.”
Some observers criticized the settlement as a missed chance to more harshly constrain algorithmic price-fixing. Lee Hepner, senior legal counsel for the American Economic Liberties Project, called the case “the tip of the spear” and said the deal contains loopholes that could allow RealPage to keep influencing rents even with older data. Hepner also faulted the lack of damages paid by RealPage, noting other firms have paid millions over similar claims.
In recent months, more than two dozen property management companies resolved suits tied to RealPage’s software. Greystar, the nation’s largest landlord, agreed to pay $50 million to settle a class action and $7 million to settle a separate lawsuit brought by nine states.
State and local responses have multiplied: governors in California and New York recently signed laws targeting rent-setting software, and cities including Philadelphia and Seattle have passed ordinances restricting such tools. Ten states — California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, North Carolina, Oregon, Tennessee and Washington — joined the DOJ’s antitrust lawsuit; those states were not part of Monday’s settlement.