The Department of Justice has reached a settlement with real estate technology firm RealPage, resolving allegations that the company’s software illegally inflated rental prices for millions of Americans. The agreement, disclosed in a North Carolina federal court, imposes significant restrictions on how the company can use landlord data to set rents.
This case marks a major development in antitrust enforcement, targeting the growing use of algorithms and artificial intelligence in pricing decisions. The settlement aims to restore competition in rental markets where landlords allegedly used the software to coordinate prices rather than compete for tenants.
Key Takeaways
- The DOJ settled its antitrust lawsuit against real estate software company RealPage.
- RealPage is now prohibited from using nonpublic, competitively sensitive data from landlords to set rent prices.
- The company's algorithms must now use data that is at least 12 months old and cannot analyze markets more granularly than the state level.
- The settlement is seen as a landmark action against "algorithmic collusion," where software is used to align prices among competitors.
- RealPage has agreed to cooperate in the DOJ's ongoing lawsuits against several major landlord companies.
Details of the Agreement
The settlement, which awaits court approval, fundamentally changes how RealPage's revenue management software operates. Under the new terms, the company must stop using any nonpublic or competitively sensitive information provided by landlords to power its rent-setting recommendations.
Specifically, the software will no longer be trained using active lease data. Instead, it must rely on historical information that is at least one year old. This change is designed to prevent real-time price coordination among property owners using the platform.
Furthermore, the agreement mandates that RealPage's models can only assess geographic market effects at the state level, preventing hyper-local price alignment in specific neighborhoods or cities. Any features that previously limited rent decreases or encouraged landlords to align their prices must be redesigned or removed entirely.
What is Algorithmic Collusion?
Algorithmic collusion occurs when competing businesses use a shared algorithm or software to set prices. Instead of making independent pricing decisions based on their own costs and demand, they effectively delegate pricing to a central system. Antitrust regulators argue this can lead to artificially high prices, similar to an illegal price-fixing agreement, by eliminating natural market competition.
A Crackdown on Digital Price-Fixing
The lawsuit, originally filed last year, accused RealPage of creating a system that allowed landlords to sidestep market competition. The DOJ alleged that by feeding their private rental data into RealPage's system, landlords were no longer rivals but participants in a scheme to maximize profits collectively.
"Competing companies must make independent pricing decisions," said DOJ antitrust chief Gail Slater in a statement. She emphasized the department's commitment to enforcement as technology evolves, noting, "with the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement."
"RealPage has built a business out of frustrating the natural forces of competition," the original lawsuit stated, highlighting the government's view of the company's business model.
The government's case was bolstered by comments from RealPage executives. According to the lawsuit, one executive said, “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”
Wider Implications for the Real Estate Industry
The initial lawsuit was filed by the DOJ alongside eight states, including California, Colorado, and Washington. Two more states, Illinois and Massachusetts, later joined the case, broadening its scope.
The legal action was also expanded to include some of the nation's largest landlords as co-defendants. Companies like Greystar Real Estate Partners, Blackstone’s LivCor, and Camden Property Trust were accused of participating in the alleged scheme.
The DOJ has already reached separate settlement agreements with two of the landlord defendants, Cortland and Greystar. Legal proceedings against the other property management firms are still pending.
As part of its settlement, RealPage has agreed to cooperate with the DOJ in its continuing litigation against the remaining landlords. The company will also be subject to a court-appointed monitor to ensure it complies with the terms of the agreement.
Company Response and Future Outlook
RealPage, based in Richardson, Texas, has framed the settlement as a positive step forward. The company can now move past the legal uncertainty that has clouded its operations.
"We are pleased to have reached this agreement with the DOJ," said RealPage CEO Dirk Wakeham. He added that the settlement "brings the clarity and stability we have long sought and allows us to move forward with a continued focus on innovation and the shared goal of better outcomes for both housing providers and renters."
For millions of American renters, the settlement is intended to bring relief from rapidly rising housing costs. By dismantling the alleged data-sharing arrangement, regulators hope to reintroduce competitive pressure that could lead to more stable or even lower rent prices in markets where RealPage's software was widely used. The outcome of this case is expected to set a significant precedent for how technology and data are used in pricing across various industries.
