California cities challenge AI-driven rent pricing by landlords
California cities including San Francisco and San Jose are responding to landlords' use of AI pricing software to coordinate rent increases. The U.S. Department of Justice has filed an antitrust lawsuit against RealPage, the Texas-based company providing the software, alleging it facilitates price-fixing that reduces competition and drives up rents.
What happened
RealPage, a Texas-based company, created software that allows landlords to collect and combine collective information about rent prices, providing justification for rent increases across different states.
The U.S. Department of Justice has filed an antitrust lawsuit against RealPage, accusing the company of manipulating rent prices in cities like San Diego, where rent has increased by almost 50 percent since 2017.
RealPage company documents included in the lawsuit state the platform 'ensures that (landlords) are driving every possible opportunity to increase price even in the most downward trending or unexpected conditions.'
Reported impact
Critics argue the software operates as a price-fixing scheme exclusive to landlords that reduces competition and drives up rent.
California Attorney General Rob Bonta stated, 'Every day, millions of Californians worry about keeping a roof over their head and RealPage has directly made it more difficult to do so.'
Index analysis
San Diego council president Sean Elo-Rivera characterized the platform as 'providing what we think of as that dark, smoky room for big companies to get together and set prices,' describing the technology as an illusion of maintaining arm's length distance between companies.
RealPage argues its software is not driving rent increases, instead attributing higher prices to low housing supply and high demand.
Governance controls
San Francisco became the first city in the United States to ban the practice of algorithmic pricing, and San Jose is considering its own ban.
Several California communities are legislating to ban this tool and similar price-setting technologies.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.