DOJ Outdoes RealPage With New Antitrust Lawsuit Over AI-Driven Rents
The Ministry of Justice (DOJ) continues to focus on alleged antitrust violations in the real estate industry.
The DOJ filed a civil suit against RealPage On Friday, he alleged that the company’s YieldStar and AI revenue management software (AIRM) allowed multifamily landlords to artificially inflate rents by sharing private information. This information was fed into the platform’s algorithms to make rental price recommendations.
“The software provides landlords with daily price recommendations, taking the guesswork out of understanding what competing landlords are doing,” DOJ Acting Attorney General Benjamin Mizer said in a statement. “As a result, landlords are unable to coordinate rents and tenants are limited in their ability to successfully negotiate counter-offers or request discounts. This type of behavior is egregious.”
The complaint alleges that landlords using YieldStar agreed to provide RealPage with “competitively sensitive data” that is not available to the public. The information is used to generate floor price recommendations for landlords and their competitors, depriving the market of independent decision-making. The DOJ claims this allowed landlords to align their prices to “turn the tide” for those using YieldStar and AIRM.
Further, the DOJ accuses RealPage of attempting to monopolize the market for commercial revenue management software through exclusionary behavior with “self-reinforcing data and economies of scale.”
During a conference call on Friday about the case, the DOJ highlighted portions of the complaint related to quoted messages in which RealPage executives said their product helps identify situations to increase rents. The DOJ also claimed that RealPage best practices can help landlords eliminate concessions such as a month’s free rent or access to amenities.
Economic Policy Organization Groundwork Collaboration praised the action as a “good day for renters and families and a bad day for predatory landlords.”
“The Department of Justice is right to address the affordability crisis that RealPage has fueled,” Lindsay Owens, executive director of Groundwork, said in a statement. “Algorithms are used to unfairly inflate prices for housing, meat and more. These price fixings must be stopped.”
A DOJ official said additional landlord defendants could be added to the complaint in the future. Several states – North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington – are also listed as plaintiffs in the lawsuit.
The DOJ lawsuit is just the latest in a series of antitrust lawsuits filed against RealPage. According to The real deal, At least seven class action lawsuits have been filed against the company in 2022, sparking an exposure of ProPublica.
In 2023, a group of tenants filed a lawsuit in Tennessee, alleging that RealPage organized a “cartel” of the country’s largest landlords.
The RealPage lawsuit comes after years of DOJ involvement in antitrust lawsuits against the real estate industry, most notably the class action lawsuits against the National Association of Real Estate Agentsbrokers and multiple listing services alleging anticompetitive conduct regarding buyer agent compensation offers negotiated on the MLS.
The $418 million settlement NAR reached in March with plaintiffs in multiple antitrust class actions has sent shockwaves through the industry as it attempts to implement and adapt to the new rules agreed to in the settlement.
