According to The New York Times (23 August), The Justice Department “filed an antitrust lawsuit on Friday against the real estate software company RealPage, alleging its software enabled landlords to collude to raise rents across the United States.” I am not an expert in law or anti-trust, but there is another (systemic risk management) angle to this story that the NYT missed, and worth spelling out.
Here’s how the Times summarizes the case:
RealPage’s software, YieldStar, gathers confidential real estate information and is at the heart of the government’s concerns. Landlords, who pay to use the software, share information about rents and occupancy rates that is otherwise confidential. Based on that data, an algorithm generates suggestions for what landlords should charge renters, and those figures are often higher than they would be in a competitive market, according to allegations in the legal complaint. By Danielle Kaye, Lauren Hirsch and David McCabe
There’s more detail in a piece (here) the Times did earlier in the year (July 19, 2024) written by Danielle Kaye. And for a lot more background see this piece in Propublica (here, October 15, 2022). One wonders why the Times waited so long until there was government prosecution to report on this topic.
Before I get to my interest in this story, the coverage highlights two important political angles: (i) this may be a contributing cause to rent inflation because the software allows landlords, which are fairly large companies that use the software, to collude; (ii) there is an interesting issue how this case fits under existing anti-trust law because the collision is kind of indirect mediated, in part, tacitly through a third party. The company itself brags they have “purposely built” their platform “to be legally compliant.” I leave the first issue to economists and the second to lawyers.