DOJ Sues RealPage Over Rental Algorithms Amid Rising Rent Crisis and Affordability Concerns

In a significant escalation of scrutiny surrounding the housing market, the U.S. Department of Justice (DOJ), alongside eight states, has filed a lawsuit against RealPage, a Texas-based software company, alleging that its rental pricing algorithms have contributed to rising rents across the nation. The complaint, which targets a company that claims to dominate the commercial revenue management software market, highlights concerns about the impact of technology on housing affordability—an issue that has become increasingly urgent in the United States. The lawsuit alleges that RealPage provides landlords with the tools to manipulate rental prices, using an advanced algorithm that recommends pricing strategies based on data collected from millions of rental properties. This practice, according to the DOJ, allows property owners to "manipulate, distort, and subvert market forces," ultimately leading to rent increases that burden tenants. The complaint specifically points out that many landlords opt to "auto accept" the rent proposals generated by RealPage, thereby relinquishing control over pricing decisions. RealPage, which is owned by private equity firm Thoma Bravo, has faced mounting criticism following an investigation by ProPublica that uncovered troubling practices linked to its software. Earlier this year, the company was already under legal scrutiny, facing lawsuits from renters and prosecutors in both Arizona and the District of Columbia. The current lawsuit marks a first for the federal government, as it seeks to tackle the widespread use of pricing algorithms that may violate antitrust laws. Despite the gravity of the allegations, RealPage has defended its practices, asserting that it serves only a small portion of the rental market and that ultimately, it is the landlords, not the company, who set the prices. In a statement issued in June, RealPage rejected claims of market manipulation, insisting that the claims were misleading. The growing spotlight on RealPage and its practices comes at a time when housing affordability is a hot-button issue across the country. The rising rent crisis has been a frequent topic in political discourse, with Vice President Kamala Harris denouncing the use of algorithms to set rents in her speeches during her presidential campaign, highlighting the need for accountability in the housing sector. The DOJ's actions reflect a broader attempt to address concerns about algorithmic pricing practices not only in real estate but across various industries, including the meat sector. Assistant Attorney General Jonathan Kanter, who leads the department's anti-monopoly unit, has emphasized that "modern-day wrongdoers cannot hide behind software algorithms and artificial intelligence to violate the law." This stance signals a commitment to investigate how technology can perpetuate economic disparities and harm consumers, particularly in essential markets like housing. As the lawsuit unfolds, it will likely shine a light on the intersection of technology, economics, and fairness in the housing market, raising important questions about the ethical implications of algorithm-driven pricing and the responsibilities of companies that wield such significant influence over the affordability of housing. The outcome could set a precedent for how pricing algorithms are regulated and the responsibilities of tech firms in ensuring fair market practices.