DOJ Takes Aim at RealPage Over Rent Algorithms Amid Housing Affordability Crisis

In a significant development in the ongoing debate over housing affordability in the United States, the Department of Justice (DOJ), alongside eight states, has accused RealPage, a Texas-based software firm, of facilitating rent increases through its pricing algorithms. The company's practices have come under scrutiny following an investigation by ProPublica, which highlighted the potential influence of such technology on rental markets. RealPage, which is owned by private equity firm Thoma Bravo, has previously rejected claims of wrongdoing, asserting that allegations of its involvement in manipulating rental prices are false and misleading. The company has stated that it serves a smaller portion of the rental market than critics suggest, emphasizing that it is ultimately the landlords who set rental prices, not their software. The DOJ's complaint suggests otherwise. It alleges that RealPage's software, which reportedly provides rent recommendations to property owners, allows landlords to "manipulate, distort, and subvert market forces." The complaint raises concerns about the firm’s dominance in the commercial revenue management software sector, claiming that it controls about 80% of the market. This concentration raises alarms about the potential for collusive practices that could exacerbate the affordability crisis affecting many American renters. This lawsuit is particularly noteworthy as it represents the federal government’s first major attempt to tackle the surge of pricing algorithms across various sectors of the economy, not just housing. Officials have indicated that they are also monitoring similar practices in industries such as meat production, demonstrating a broader commitment to addressing algorithm-driven pricing issues. Assistant Attorney General Jonathan Kanter, who heads the DOJ's anti-monopoly unit, emphasized that the use of software algorithms or artificial intelligence cannot shield companies from legal accountability for anti-competitive practices. The timing of this lawsuit coincides with heightened public concern over housing costs, making the issue a key talking point among political figures, including Vice President Kamala Harris. During her presidential campaign, Harris has frequently criticized rent-setting algorithms, framing them as a significant factor driving up housing costs, particularly in low-income communities. As litigation unfolds, the ramifications of this case could extend beyond RealPage, influencing how technology companies approach pricing models and how regulators enforce fair competition in the marketplace. With housing affordability a pressing issue for many Americans, this lawsuit could serve as a pivotal moment in redefining the intersection of technology and housing policy in the United States.