WASHINGTON — On Monday, a lawyer representing RealPage, which the Justice Department accused of assisting landlords in maintaining elevated rents, defended the company by stating that it doesn’t impede competition. He claimed that quotes from the company’s executives in the lawsuit were selectively used and misrepresentative.

This statement comes in response to a lawsuit filed by the Justice Department along with eight state attorneys general on Friday in federal court in North Carolina, alleging that RealPage facilitated landlords in sharing confidential information about rents, vacancies, and incentives to keep rental prices inflated.

Stephen Weissman, an external attorney for RealPage, contended that the data-sharing practices are lawful because the company compiles rental information from multiple sources instead of revealing specific rental rates from competing properties.

He noted that the actual rents charged by landlords should not lead to increased prices, as they are typically lower than the advertised rates.

Weissman, who previously served as deputy director of the Federal Trade Commission’s competition bureau, stated, “Our software doesn’t create higher rates than would occur in a competitive environment.”

The lawsuit initiated by the government is intricate and could result in protracted legal proceedings. Weissman mentioned that RealPage is open to discussing modifications to its software to more swiftly address the government’s issues.

“Our aim is to follow the law,” said Weissman. “We firmly believe our product complies with legal standards, but we are receptive to solutions that will enable us to keep innovating and competing in the marketplace.”

Allegations Against RealPage in the Lawsuit

The Justice Department, along with attorneys general from eight states, has lodged a lawsuit against RealPage, a software provider for landlords that manages approximately 16 million rental units mainly across the Sun Belt and South regions of the U.S.

The federal lawsuit filed in North Carolina claims that RealPage possesses a monopoly over “revenue management software” for landlords, controlling around 80% of the market. It asserts that by conveying sensitive information from landlords concerning rents, leases, and vacancy rates, RealPage enables them to conspire to maintain high prices and limit competition for millions of renters across the country.

The lawsuit states that without RealPage’s data and suggestions regarding competitors’ rents and available vacancies, landlords would likely raise their prices or reduce discounts, like offering a month free.

“Americans should not have to bear higher rents because a company has devised a scheme with landlords to violate the law,” said Attorney General Merrick Garland on Friday.

The states involved in the lawsuit are California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington.

RealPage Claims the DOJ Lawsuit Misrepresents Executive Statements

Officials from the Justice Department indicated that this marks the first civil case in which the government claims an algorithm was employed in allegedly breaching federal law.

RealPage utilizes algorithmic pricing software to analyze data and provide rental price recommendations. The lawsuit referenced instances where RealPage and landlords supposedly exploited the shared information.

In one instance, a RealPage executive informed a landlord that using competitor information could lead to identifying potential rent increases, suggesting a $50 increment instead of a $10 increase for the day, as stated in the lawsuit.

A landlord is quoted in the lawsuit expressing, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rent and terms. That could be considered classic price fixing.”

“Training a machine to break the law still counts as breaking the law,” remarked Deputy Attorney General Lisa Monaco on Friday.

Weissman asserted that quotes from executives in the lawsuit were taken out of context from the millions of documents reviewed during the extensive two-year investigation.

For example, one executive was quoted as saying that a “rising tide lifts all boats,” seemingly in reference to increasing rents. However, Weissman clarified that the remark was about both the occupancy rates and revenue generation.

“The lawsuit misrepresents many facts,” Weissman commented. “It selectively extracts statements and documents without proper context, and most significantly, it fails to mention key aspects of the software that ensure its legal compliance.”

Antitrust Agenda of the Biden Administration

The increase in housing costs is a major issue for American consumers as the presidential election in November approaches, with national home prices climbing approximately 50% in the last five years and rents rising around 35% during the same period, as reported by real estate firm Zillow.

This lawsuit adds to the Justice Department’s ongoing efforts to combat business consolidations that the government claims reduce consumer choices and inflate prices, an initiative that has intensified since President Joe Biden assumed office.

The Federal Trade Commission is actively working against the proposed merger between Kroger and Albertsons grocery chains. Furthermore, a federal court decided on August 5 that Google unlawfully used its dominance in the search engine market to obstruct competition. Other prominent lawsuits include actions taken in May against Live Nation Entertainment, which owns Ticketmaster, and in March against Apple.

Recently, Vice President Kamala Harris, the Democratic presidential nominee, revealed a strategy to tackle high housing costs by pledging to construct 3 million additional homes.

Without expressing an opinion on the lawsuit, Lael Brainard, the national economic adviser at the White House, stated that the Biden administration is committed to ensuring that “no one should face higher prices due to corporate wrongdoing.”