Assistant Attorney General Jonathan Kanter Delivers Remarks on the Justice Department’s Lawsuit Against RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters

Remarks as Prepared for Delivery

Renters deserve the benefits of vigorous competition. In prosperous times, that competition should limit rent hikes; in harder times, competition should bring down rent, making housing more affordable.

RealPage has built a business out of frustrating the natural forces of vigorous competition.

In the words of RealPage, “a rising tide raises all ships.” This is more than just marketing. It’s literally the cost of housing for millions of Americans.

For RealPage, that rising tide of rents means more profits. For landlords, that rising tide means more revenues from higher rents. 

But renters pay the price. For renters, that rising tide means less money for food, healthcare, childcare and education. For renters, that rising tide means less money for families to make ends meet.

Today, we filed an antitrust suit against RealPage to fight the rising tide of high rent, to restore competition and to make housing more affordable for millions of people across the country.

This is best understood in the words of RealPage’s own executives. Here are some examples:

RealPage says its software enables landlords to — and this is a direct quote — “driv[e] every possible opportunity to increase price even in the most downward trending or unexpected conditions.” But independent decision making by landlords — not RealPage — should determine rental prices.

RealPage encourages landlords to “[e]liminate concessions.” But competition — not RealPage — should determine whether a renter gets a free month of rent when signing a lease.

RealPage tells landlords that it would prefer “everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.” But that’s not how free markets work. Competition among landlords — not RealPage — should determine prices for renters in our free market system.

When a landlord asked, “who are your competitors?” A RealPage executive responded: “Our revenue management solution does not have any true competitors.” But honest businesses should not have to break the law just to compete with RealPage and its monopoly.

These quotes are just the tip of the iceberg. There are many, many more examples in our extensive complaint, which spans over 100 pages.

The time has come to stop this illegal conduct.

I want to thank the Antitrust Division’s attorneys, paralegals, economists, data scientists and professional staff for making this lawsuit possible. Over nearly two years, they have worked nonstop, going document by document and line by line of code to understand RealPage and its anticompetitive scheme.

Together with our State partners, this team has proven that antitrust law enforcement can and will keep pace with changes in the technology of lawbreaking.

On the one hand, we used our traditional economic and investigative tools such as reviewing internal documents and taking deposition testimony.

On the other hand, we also used data science experts to interrogate the code so that we can understand how algorithms use sensitive information from landlords to recommend and set prices.

Our lawsuit demonstrates that modern-day wrongdoers cannot hide behind software algorithms and artificial intelligence to violate the law.

Throughout this investigation, we learned that the modern machinery of algorithms and AI can be even more effective than the smoke-filled rooms of the past.

You don’t need a PhD to know that algorithms can make coordination among competitors easier. Algorithms process far more information more rapidly than humans. The technical capabilities of software can enhance competitors’ ability to extract gains; tip the market in favor of monopolies; and undermine the competitive process.

While these modern technologies might have been unimaginable in 1890 when Congress passed the Sherman Act, Congress knew then what we know today. A restraint of trade is still a restraint of trade and monopolization is still monopolization.

The antitrust laws had something to say about it then and the antitrust laws have something to say about it now.  

And let me be clear: when companies use artificial intelligence to set artificially high prices, the antitrust laws have something to say about that too.

We are joined in sending that message by the Attorneys General and the terrific staffs from North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington.

We are honored to stand together to protect competition on behalf of American renters.  

Thank you. 

Department of Justice
Office of Public Affairs

Source: Justice.gov