Landlords Face New Restrictions Following DOJ Settlement on Alleged Algorithmic Collusion
A recent settlement between RealPage Inc. and federal prosecutors signals a significant shift in rental market dynamics, prohibiting landlords from using certain rent-pricing software that critics claimed facilitated illegal collusion. This development may lead to reduced rental prices and increased competition among landlords, marking a critical step in addressing transparency within the housing market.
Key Points / What’s New
- The Department of Justice announced a settlement with RealPage to halt “algorithmic collusion” affecting rental pricing.
- The software company’s access to confidential data that informed pricing recommendations will now be limited to data that is a year old.
- The settlement comes after a yearlong federal antitrust lawsuit without requiring RealPage to admit liability or pay damages.
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Settlement Terms and Implications
The deal, revealed on a Monday, limits RealPage’s ability to utilize real-time data for pricing suggestions in the rental sector. Instead, data used for the software’s algorithm must now be at least one year old. DOJ antitrust chief Gail Slater emphasized that this shift is intended to create a more competitive rental market and reduce reliance on algorithms that can inflate rental prices.
Quotes and Reactions
“RealPage was replacing competition with coordination, and renters paid the price,” Slater stated, highlighting the detrimental impact of the company’s practices on consumers. In a video, she addressed the broader implications, stating, “It means rents set by the market, not by a secret algorithm.”
RealPage’s attorney, Stephen Weissman, expressed satisfaction with the settlement, noting the company’s commitment to clarifying the alleged misconceptions about its software. Weissman emphasized that the software’s historical use of aggregated, nonpublic data was meant to benefit both Airbnb providers and renters alike.
Concerns Over Efficacy of Settlement
However, some observers criticized the agreement, viewing it as a missed chance to implement stricter regulations against algorithmic price manipulation. Lee Hepner, senior legal counsel for the American Economic Liberties Project, argued that the settlement contains loopholes that allow RealPage to continue exerting influence over rental prices. Furthermore, Hepner pointed out that RealPage’s lack of liability is at odds with other companies that have faced hefty fines for similar practices.
Background
The Justice Department’s lawsuit against RealPage was initiated during the Biden administration, focusing on concerns that landlords used the software to coordinate pricing strategies at the expense of renters. This case emerged alongside initiatives from various states and cities, including California and New York, which have enacted laws targeting rent-setting software and its potential for price-fixing. Over 10 states, including California and Colorado, were active participants in the DOJ’s lawsuit, although they were not included in the recent settlement agreement.
