WASHINGTON − The Justice Department, along with attorneys general from eight states, has launched a lawsuit alleging that a Dallas-based company, RealPage, gathered critical data from landlords across the country, facilitating the coordination and escalation of rental prices for millions of renters.

RealPage creates software that assists landlords in managing around 16 million rental properties, mainly situated in the Sun Belt and Southern states. The federal lawsuit, filed in North Carolina, claims that RealPage monopolizes the “revenue management software” market for landlords, controlling 80% of it nationwide.

The lawsuit argues that by providing landlords with crucial information regarding rental prices, lease agreements, and vacancy numbers, RealPage enables them to collude, stifling competition and inflating prices. Without access to RealPage’s insights and suggestions about competitors’ rents and available vacancies, landlords might not be able to raise prices or avoid concessions like offering a rent-free month, according to the suit.

“Americans shouldn’t have to pay higher rents because a company has discovered a new means to conspire with landlords to break the law,” stated Attorney General Merrick Garland.

RealPage has not yet provided a comment regarding the allegations.

RealPage employs algorithm-based pricing software that provides suggestions for setting rental rates. The lawsuit highlights instances where RealPage and landlords allegedly utilized the shared information.

According to the lawsuit, a RealPage executive informed a landlord that utilizing competitor data could help detect where they might implement a “$50 increase instead of a $10 increase for the day.”

The lawsuit further included a landlord’s remark on RealPage’s software: “I always appreciated this product because your algorithm uses exclusive data from other subscribers to suggest rent and terms,” he stated. “That’s a classic example of price fixing.”

“The effects of this conduct are far-reaching,” expressed Assistant Attorney General Jonathan Kanter, who leads the department’s antitrust division. “As many Americans struggle with housing affordability, RealPage is simplifying the process for landlords to raise rents.”

Garland emphasized that housing costs represent the largest ongoing expense for Americans, and the alleged collaboration between RealPage and landlords has kept prices higher than they might otherwise be.

“Everyone knows that rents are excessively high, and we claim this is one of the reasons,” Garland remarked.

First Algorithm-Based Antitrust Case

Officials from the Justice Department indicated that this lawsuit marks the first civil case where the government has claimed that an algorithm was the method responsible for purportedly violating federal law. Kanter engaged data scientists and researchers to investigate such technological collusion, leading to the lawsuit after nearly two years of inquiry.

“By integrating sensitive data into a sophisticated algorithm using artificial intelligence, RealPage has discovered a contemporary way to breach a century-old law through systematic coordination of rental prices – eroding competition and fairness for consumers in the process,” added Deputy Attorney General Lisa Monaco. “Programming a machine to contravene the law is still a violation of the law.”

States involved in the lawsuit include: California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington.

Biden Administration’s Antitrust Efforts

This lawsuit represents the latest initiative by the Justice Department against the consolidation of businesses, which the government believes limits consumer choices and increases prices since President Joe Biden took office.

A federal court ruled on August 5 that Google misused its dominance in online searches to suppress competition.

Earlier, the department filed a lawsuit against Live Nation Entertainment, the parent company of Ticketmaster, in May, claiming it monopolized the live event market. This legal action aims to lower ticket prices for fans and create more opportunities for musicians.

In March, the department sued Apple, alleging monopolistic practices in the smartphone market that hindered consumers from easily switching devices, stifled innovation, and raised costs for developers and businesses.

Additionally, Vice President Kamala Harris recently unveiled a strategy to combat rising housing costs by proposing the construction of 3 million additional homes.