RealPage Sues Berkeley Over Ban on Algorithmic Rental Pricing

The metropolis of Berkeley, California is being sued by RealPage implicit its prohibition connected algorithms utilized to find flat rental prices. The suit states that Berkeley’s ordinance passed successful March represents a “sweeping and unconstitutional prohibition connected lawful speech,” and a usurpation of the First Amendment’s prohibition connected content-based restrictions.

RealPage is simply a arguable institution that has been likened to a cartel by immoderate lawmakers crossed the United States. It fundamentally offers landlords an algorithm that tin maximize their revenue by evaluating a customer’s properties on with rental information from adjacent properties to connection suggested pricing. Critics contend that the signifier amounts to amerciable price-fixing. Last year, the Department of Justice nether erstwhile President Joe Biden filed a civilian antitrust suit against RealPage, accusing it of decreasing contention amongst landlords by generating terms recommendations based connected rivals’ pricing information, whereas successful a “free” marketplace the owners would person to vie independently based connected pricing, lease terms, and different factors. Prosecutors accidental RealPage controls 80% of the marketplace for commercialized gross absorption software.

Data compiled by the Department of Justice showed however successful definite regions wherever RealPage bundle was prevalent, rents person accrued astatine a higher gait than the nationalist average, though it is hard to quantify however overmuch RealPage bundle is liable for these increases. In its lawsuit, however, the Justice Department cited RealPage executives’ ain words astir however the merchandise tin maximize revenue: “There is greater bully successful everybody succeeding versus fundamentally trying to vie against 1 different successful a mode that really keeps the full manufacture down.”

Proponents of the “abundance” oregon YIMBY movements person argued that deregulation of the lodging marketplace volition pb to little rental prices. Developing caller properties successful states similar California is simply a slow, arduous process, and caller flat buildings are often targeted by NIMBY types who usage biology laws to effort and thwart immoderate development.

A communal refrain successful MBA programs is that companies should not enactment successful terms wars. RealPage’s comments suggest it follows specified logic, though the institution is adamant that it does not enactment successful amerciable collusion. It says that landlords judge its suggestions little than 50% of the time, and the institution believes Berkeley’s prohibition amounts to scapegoating. The existent issue, RealPage says, is simply a terrible deficiency of lodging supply.

In 1 lawsuit cited by the Justice Department, RealPage suggested a landlord could summation rent by 7% by decreasing their occupancy complaint from 97% to 95%. But successful a marketplace with precocious vacancies, RealPage would argue, landlords would inactive beryllium bound by marketplace forces to little rent successful bid to deed that occupancy target.

In Berkeley specifically, a study from the Housing Advisory Commission recovered that six large existent property firms named successful lawsuits implicit RealPage’s bundle ain implicit 1,300 apartments successful the city. The prohibition connected RealPage is acceptable to spell into effect connected April 24, but RealPage is seeking a impermanent restraining bid to artifact it.

While RealPage has leaned heavy connected First Amendment arguments, a batch of activities that impact escaped code are inactive illegal. Conspiring to hole prices whitethorn impact escaped speech, but that does not marque regulating it illegal.

No substance however this shakes out, landlords should beryllium conscious that they are not held successful precocious respect successful the United States, and this bundle is not doing them immoderate favors.