Justice Department Accuses Major Landlords of Using Algorithms to Collude and Keep Rents High

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The Justice Department has recently accused six major landlords of colluding to keep rents high through the use of algorithms and the sharing of sensitive data. This accusation is part of a broader legal action that highlights the role of technology in facilitating anticompetitive behavior in the rental market.

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The landlords are alleged to have used software provided by RealPage Inc., a real estate software company, to share confidential information on rents and occupancy rates with competitors. This data sharing enabled the landlords to align their rental prices, effectively reducing competition and keeping rents artificially high. The algorithm used by RealPage collected lease transaction data from a group of competitors and provided regular price recommendations, which helped landlords maintain high prices without fear of being undercut by competitors.

The implications of this collusion are significant. Rent prices have increased substantially since 2020, with the largest increases affecting lower- and middle-tier apartments rented by lower-income consumers. This has exacerbated the housing affordability crisis, making it more difficult for many people to find affordable housing.

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The Justice Department's lawsuit seeks to stop this collusion and restore competition in the rental market. If the court finds that the landlords' actions violated antitrust laws, the department will seek an order to cease the collusive practices and restore competitive pricing for the benefit of renters across the country.

In addition to the ongoing legal battle, this case has sparked a broader debate about the role of algorithms and data sharing in the rental market. Critics argue that such practices can lead to unfair market conditions and exacerbate housing inequalities. On the other hand, proponents of algorithmic pricing argue that it can improve efficiency by making prices more responsive to changing market conditions. However, the widespread adoption of the same algorithms by multiple companies can lead to unintended consequences, such as the collusion seen in this case.

The outcome of the lawsuit could have far-reaching implications for the use of technology in the rental market and may influence future regulations aimed at preventing anticompetitive behavior.