The U.S. Department of Justice (DOJ) recently filed a civil antitrust lawsuit against RealPage Inc., a property management software company used by landlords across the country. The lawsuit targets an allegedly unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize commercial revenue management software.
The complaint alleged that RealPage contracts with competing landlords who agree to share with RealPage “nonpublic, competitively sensitive information” about their apartment rental rates and other information to train RealPage’s AI Revenue Management (AIRM) and YieldStar algorithmic pricing software. This software generates recommendations on apartment rental pricing for landlords based on their and their rivals’ sensitive information.
Greystar, the nation’s largest property management firm and owner of The Hub On Campus Madison, uses RealPage’s software to price tens of thousands of apartments nationwide.
When asked if The Hub uses algorithmic devices or RealPage’s software to determine rents, a spokesperson for The Hub declined to comment, referring to Greystar media relations for a comment.
Greystar did not respond to The Daily Cardinal’s request for comment.
Monopoly on management
The DOJ also alleges that RealPage has unlawfully maintained its monopoly over commercial revenue management software, in which RealPage commands approximately 80% market share according to the complaint.
With an 80% market share in such software, it is likely that other Madison apartments use RealPage’s service.
“Coordination among competing landlords is a feature of this industry” the DOJ alleges, and AIRM and YieldStar enable “landlords to track one another more easily.”
Can cities ban rent pricing tools?
In July of this year, the San Francisco Board of Supervisors passed an ordinance prohibiting the sale or use of algorithmic devices to set multifamily rents or manage occupancy levels. The “Ban on Automated Rent-Setting” ordinance was aimed at technology developed by RealPage and other third-party revenue management companies.
San Francisco became the first city in the U.S. to ban this type of property management software. The law will impose civil penalties of up to $1,000 for each violation and fines that cover damages, restitution and attorneys' fees.
“This ordinance will be an example for cities all over this country,” supervisor and board president Aaron Peskin said.
The Madison Common Council has not passed or proposed similar legislation.
RealPage spokesperson Jennifer Bowcock has previously criticized San Francisco’s ordinance, emphasizing that RealPage’s software is legally compliant and can be adjusted to adhere to the new regulations.
Ty Javier is a senior staff writer and photographer at The Daily Cardinal. He is an Economics major and has specialized in university and campaign finances, economic policy and transit.
