The Department of Justice is filing an antitrust lawsuit against RealPage, a real estate software company, accusing it of orchestrating a scheme to coordinate with other landlords to raise prices nationwide using an algorithm to give high recommended rent prices.
"Everybody knows the rent is too damn high. And we alleged this is one of the reasons why," said U.S. Attorney General Merrick Garland.
The lawsuit is being filed alongside attorneys general from eight states, including California and North Carolina.
In 2021 and 2022, rents exploded across the country. In the 50 largest metro areas, rents rose 19.3% over a year. It's tapered off since but has remained high for many renters.
RELATED STORY | When home prices make renting the smarter choice
RealPage has garnered scrutiny since 2022, when a ProPublica investigation suggested it could be one of the reasons behind that sharp increase.
The DOJ believes that this algorithm helped get landlords on the same page, undercutting competition that would usually help keep prices lower.
"Competing landlords agree to submit to RealPage on a daily basis their most sensitive nonpublic information, including rental rates, lease terms and projected vacancies. RealPage then combines this data from competing landlords and feeds it into an algorithm that provides real-time pricing recommendations back to the competing landlords," said Garland.
The company is not the only one to offer such software, but the lawsuit claims it's the largest in the industry, saying it controls 80% of the market.
"So make no mistake, training a machine to break the law is still breaking the law. Price coordination using AI is still price coordination. And monopolization advanced by an algorithm is still monopolization," said Lisa Monaco, deputy U.S. Attorney General.
RELATED STORY | Here's where rent prices are dropping and rising in the US
Detroit-based trial attorney Michael Jaafar believes this lawsuit is smoke and mirrors and wrongfully puts the blame for the housing market on a single private company whose services are not mandatory, even if it has a market majority.
"It's wrong. And I'll tell you why it's wrong: because RealPage is just a service. It's an analytics platform... It's not like they're providing a utility service that everybody has to use. It's not like it's the railroad," said Jaafar.
In a statement to the AP, RealPage said the suit is "devoid of merit and will do nothing to make housing more affordable."
This filing is the latest by the DOJ to try and tackle rising prices through antitrust suits, including against Apple and TicketMaster, something Jaafar disagrees with as the right move to combat high costs.
"The government is not concerned with making money. They're concerned with getting justice. The problem comes in when you have an administration that has political agendas," he said.
As both sides move to the next phase, Jaafar says RealPage has a battle ahead.
"Either you survive or you die. There have been websites that have just died under something like this. I don't think that would happen to RealPage. What RealPage is going to have to do is just fight this and fight this in the public spectrum," said Jaafar.
