The U.S. Department of Justice has launched a significant antitrust lawsuit against RealPage, a prominent property management software company, accusing it of facilitating a nationwide price-fixing scheme that has driven up rent prices for millions of Americans. The lawsuit, filed on Friday, claims that RealPage's software enabled landlords to collude on rent prices by sharing sensitive, nonpublic information, resulting in artificially inflated rents and reduced competition in the housing market.
The Justice Department, joined by attorneys general from eight states-California, Colorado, Connecticut, Minnesota, North Carolina, Oregon, Tennessee, and Washington-alleges that RealPage violated sections 1 and 2 of the Sherman Act, a cornerstone of U.S. antitrust law. According to the complaint, RealPage's algorithmic pricing software, designed to optimize rents, replaced natural market competition with a coordinated approach that favored landlords at the expense of renters.
"Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law," stated U.S. Attorney General Merrick B. Garland. He emphasized that the use of software to facilitate collusion does not shield RealPage from legal accountability. Deputy Attorney General Lisa Monaco further criticized the company, asserting that "training a machine to break the law is still breaking the law," and vowed to use all available legal tools to combat such anticompetitive conduct.
RealPage, headquartered in Richardson, Texas, has responded to the allegations by denying any wrongdoing. The company maintains that its software is designed to be legally compliant and that its clients-landlords-retain full control over the final rent prices. A spokesperson for RealPage stated, "RealPage's revenue management software is purposely built to be legally compliant, and we have a history of working constructively with the DOJ."
Despite these assurances, the lawsuit represents a broader effort by the Biden administration to address corporate practices that are seen as contributing to rising costs of living, particularly in housing. With rents having surged more than 30% since the start of the COVID-19 pandemic, the administration has been under increasing pressure to take action. Vice President Kamala Harris has made reducing housing costs a key component of her campaign, pledging to tackle what she describes as "unfair rent increases."
The lawsuit centers on RealPage's revenue management software, YieldStar, which holds a dominant 80% share of the market for such tools. YieldStar is reportedly used in approximately three million rental units across the United States. The DOJ's complaint argues that the software allowed landlords to coordinate rent increases by analyzing data on rental prices and other leasing terms shared among competitors.
RealPage has acknowledged that its software is designed to maximize profits for landlords, a goal that one of its executives described as "driving every possible opportunity to increase price." The DOJ's investigation revealed that some landlords using the software believed it enabled them to move in "unison" rather than compete against one another-a description that the DOJ says amounts to price-fixing.
The legal challenge against RealPage is part of a broader crackdown on corporate power by the DOJ and the Federal Trade Commission (FTC). The Biden administration has been actively pursuing antitrust cases against major technology firms like Google, Amazon, and Apple, as well as companies in sectors such as food, chemicals, and healthcare. The DOJ has also been particularly focused on what it calls "algorithmic collusion," where companies use technology to facilitate price-fixing and other anticompetitive practices.
Assistant Attorney General Jonathan Kanter, who leads the DOJ's Antitrust Division, noted that the department's investigation included not only lawyers and economists but also data scientists who analyzed the algorithms used by RealPage. "Competition-not RealPage-should determine what Americans pay to rent their homes," Kanter said, underscoring the DOJ's commitment to protecting consumers from anticompetitive conduct.
While no landlords were named as defendants in the lawsuit, the complaint suggests that they are also under scrutiny. The DOJ has an ongoing criminal investigation into price-fixing practices involving both RealPage and certain landlords, indicating that more legal action could be forthcoming.
RealPage has defended its practices by pointing to its history of cooperation with the DOJ. The company referenced its 2017 acquisition of a competing software provider, LRO, which received DOJ approval without objections to RealPage's revenue management products. However, the current lawsuit indicates that the DOJ now views RealPage's practices in a different light, especially given the widespread impact on renters.
