RealPage says it will cooperate with the Department of Justice in a lawsuit over the rental algorithm
A lawyer for Richardson-based real estate software company RealPage denied allegations that the company was involved in an illegal scheme to reduce competition among landlords in apartment pricing.
However, the company said on Monday it was willing to work with the U.S. Department of Justice to address concerns about the legality of its algorithmic pricing software.
“We have made it clear to the Department of Justice that we firmly believe in the legality of our products, but if there are solutions that allow us to continue to innovate and remain competitive in the marketplace, we are open to those solutions,” said Stephen Weissman, an antitrust lawyer who serves as outside counsel to RealPage.
The comments come after the Justice Department filed an antitrust lawsuit against the company on Friday.
As of Monday afternoon, eight states, including California, had joined the lawsuit to stop RealPage’s algorithm. The 115-page lawsuit was filed in the Middle District of North Carolina.
The lawsuit alleges that RealPage allows landlords to match apartment prices with those of their competitors. RealPage enters into contracts with competing landlords who agree to share nonpublic information about apartment rental prices and other lease terms with RealPage.
The information becomes part of RealPage’s algorithmic pricing software and the software provides price recommendations in near real-time.
“A significant number of landlords then effectively agree to outsource their pricing function to RealPage, with automatic acceptance or other settings so that RealPage, as the intermediary, rather than the free market, determines the price a tenant will pay,” the Justice Department’s lawsuit states.
The Justice Department alleged that the information sharing was unlawful and that the massive amount of data allowed RealPage to maintain its monopoly on the commercial revenue management software market. The lawsuit alleges that RealPage controls at least 80% of that market.
During a phone call with reporters on Monday, Weissman refuted several allegations made by the Justice Department.
Weissman claimed that the federal government had deliberately cherry-picked statements and documents without any ownership context.
The Justice Department also omitted key features of RealPage’s software that make it legal. The data used in the software is anonymized and aggregated from multiple sources, he said.
“What the Justice Department’s complaint leaves out is that the nonpublic data is a very minor feature of the product,” said Weissman, a former deputy director of the Federal Trade Commission’s Bureau of Competition. “As a user, you have no idea whose information is stored there.”
Unlike other cases brought against Realpage by private plaintiffs over the past two years, the Justice Department’s case focuses exclusively on RealPage and does not name the apartment building managers and owners as defendants.
The first lawsuits were filed after ProPublica reported that landlords across the U.S. were using RealPage’s YieldStar algorithm to force their tenants to pay the highest possible rent.
The Justice Department filed its lawsuit after a two-year investigation. RealPage has not filed a response to the lawsuit in federal court.
“We are a company that takes our legal obligations seriously and is committed to addressing the problems of affordable housing in the United States,” Weissman said.
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