The Condominium Rental Market Is Rigged by Algorithms, a DOJ Lawsuit Alleges

For those who’ve rented an condo within the US within the final a number of years, you might have had the sense that the sport was rigged: Costs creep up not solely at your constructing however at others all through the town, seemingly in lockstep. A brand new civil lawsuit introduced by the US Division of Justice immediately alleges that in lots of instances it’s not simply in your head—and {that a} single firm’s algorithm is responsible.

That firm is RealPage, a Texas-based agency that gives business income administration software program for landlords. In different phrases, it helps set the costs of flats. Nevertheless it does so, the DOJ alleges in its lawsuit, by successfully serving to its shoppers cheat; landlords feed rental charge and lease phrases into the system, and the RealPage algorithm in flip spits out a instructed worth that allows coordination and hinders competitors.

“By feeding delicate knowledge into a classy algorithm powered by synthetic intelligence, RealPage has discovered a contemporary strategy to violate a century-old regulation by way of systematic coordination of rental housing costs,” deputy lawyer normal Lisa Monaco stated in a press release.

RealPage’s attain is broad. It controls 80 p.c of the marketplace for software program of its type, which in flip is used to set costs of round three million models throughout the nation, in keeping with the DOJ. It already faces a number of lawsuits, together with one from the state of Arizona and one other in Washington, DC, the place RealPage software program is allegedly used to cost greater than 90 p.c of models in massive condo buildings. RealPage’s algorithmic pricing first gained broader consideration when a 2022 ProPublica investigation uncovered how the corporate’s YieldStar software program works.

The DOJ civil lawsuit, which was joined by the attorneys normal of eight states, is a big escalation in authorized motion in opposition to the corporate. It’s additionally a primary for the DOJ, in keeping with officers talking on background throughout a name to debate the criticism. Whereas the federal government had beforehand filed legal fees in opposition to an Amazon vendor for algorithm-enabled price-fixing, that is the primary civil motion through which the algorithm itself, the Justice Division official says, was successfully the technique of the violation.

The criticism itself quotes RealPage executives allegedly acknowledging anticompetitive elements of its product. “There’s better good in everyone succeeding versus basically making an attempt to compete in opposition to each other in a approach that really retains the complete trade down,” one RealPage government allegedly wrote.

RealPage has repeatedly denied any allegations of antitrust violations, going as far as to publish a six-page digital pamphlet that claims to inform “The Actual Story” about its merchandise, together with an in depth FAQ web page on a devoted public coverage web site. “Assaults on the trade’s income administration are primarily based on demonstrably false data,” one part of that web site reads. “RealPage income administration software program advantages each housing suppliers and residents.”

The DOJ disagrees. “Algorithms don’t exist in a law-free zone,” stated Monaco in a press convention to debate the case. “Coaching a machine to interrupt the regulation continues to be breaking the regulation.”

The Justice Division has spent the final a number of years staffing up with technologists and knowledge scientists, higher enabling them to “interrogate the code,” as a number of officers described the investigative course of.

This can be a growing story. Please test again for updates.