The situation unfolding across America since 2020, where rent has risen by 20%, and the subsequent legal actions against RealPage and various landlords, directly illuminates the insidious ways in which market concentration, advanced technology, and profit-driven strategies are reshaping fundamental aspects of daily life. This development is not merely an isolated incident but a striking example of broader economic and societal shifts detailed within our sources, highlighting the pervasive influence of consolidated power and the increasingly sophisticated methods employed to leverage it.
At the core of the current legal battle is the allegation that companies like RealPage are enabling an “algorithmic housing cartel”. The mechanics of this alleged cartel are quite revealing. Investigators in the Phoenix area, for instance, noted that apartment rents surged by 76% since 2016, with four buildings showing rents 12% higher than others despite similar amenities and different landlords. The common thread, as alleged, was that prices were being set by one entity: an algorithm owned by RealPage. This is described as “old fashioned price fixing using new technology”.
RealPage’s software allows landlords to input their data, after which the algorithm sets the prices for those landlords. This alleged system aggregates what would otherwise be confidential information among competitors, such as rent prices, lease expiry dates, and tenant deals. The algorithm then “spits out a pricing recommendation,” designed to keep the overall market at its peak, effectively controlling the market rather than merely reacting to it. The Attorney General of Arizona explicitly states that landlords “are not charging what the market can bear. They are controlling the market”. This practice ensures that even if tenants move out, revenue continues to grow through coordinated price increases, as landlords are told not to worry about occupancy rates.
The implications of this alleged algorithmic control are profound. It is asserted that this scheme has directly led to widespread evictions and even homelessness, as people are unable to afford artificially high rents set by the algorithm. This situation underscores the immense impact that a few lines of code can have on the American housing market.
The industry’s defense, that the rental market is too large and messy for such a “secret deal” to stick, and that more housing, not less data sharing, is the solution, is challenged by the scale of RealPage’s alleged control. For instance, RealPage is said to control nearly 90% of apartment owners in the D.C. metropolitan area, 70% of rental units in Phoenix, and at least 50% of the market in Tucson. Such dominant market shares hardly suggest a fragmented, competitive market.
This concerted action by the Attorney Generals of Arizona and D.C., along with a criminal investigation by the Department of Justice, aligns with a broader, increasing scrutiny of corporate monopolies and their impact across various sectors of the American economy. As our ongoing discussion has illuminated, there is a rising “antimonopoly movement” and popular frustration with corporate concentration across the political spectrum. The American economy has seen a trend where “open markets are gone, replaced by a handful of corporate giants,” leading to increased economic inequality and a sense that “the institutions that touch our lives are unreachable”.
We have seen how such concentrated power manifests in different industries:
- Healthcare: America’s largest insurer, United Healthcare, stands accused of leveraging its massive scale and vertical integration to deny claims, underpay doctors, and acquire practices, ultimately increasing its profits significantly.
- Concert Industry: The “two-headed Beast” of Live Nation and Ticketmaster has allegedly transformed concert-going from an affordable experience into a luxury good by charging exorbitant fees and controlling the entire ecosystem, stifling creative expression and impacting smaller venues.
- E-commerce: Amazon’s increasing fees for sellers, reaching nearly 50% of revenue in the first half of 2023, effectively act as a “50% tax” that inflates prices for consumers.
- News Media: Companies like Google and Meta have siphoned off advertising revenue, leading to the demise of newsrooms and prompting legal challenges to force them to compensate publishers.
- Essential Services: From airlines to pharmaceuticals, monopolization is linked to rising costs and diminished quality of service, creating a system where civic leaders are “washed away by a wave of Walmarts and Targets and Amazons”. The opioid crisis, for example, has seen key medications monopolized, with prices tripling, straining the budgets of those saving lives.
The reliance on algorithms, as seen with RealPage, is a significant part of this trend. While algorithms and machine learning offer “a lot of positive things,” they also pose risks, especially when they concentrate “incredible amount of power to the few”. The ability of companies to mine online interactions for data and use it for differential pricing, while potentially efficient, is “increasingly resented” and raises questions about privacy intrusion and societal costs. The sources acknowledge that technology is “continuously creating opportunities for new products and services,” but the crucial question remains about the ethical and equitable distribution of these advancements.
The broader context is one where deregulation, often pushed by entrepreneurs and influenced by powerful financial interests, has led to increased competition for some, but for many, it has meant pressure on wages, job cuts, and the demise of labor protections. The American Bar Association, for instance, once advocated for the protection of corporations as “persons” under the Fourteenth Amendment, which was originally intended to protect Negro rights, with the majority of subsequent cases dealing with corporations rather than civil rights. This historical backdrop further underscores how legal and economic frameworks have been shaped to favor concentrated capital.
In essence, the RealPage lawsuits represent a fresh front in the ongoing battle against concentrated corporate power. It is a struggle to rein in the digital manifestations of monopoly, ensuring that technology serves the many, rather than becoming another tool for the “unseen forces” that contribute to economic insecurity and social dysfunction. The truth is, this is an economic battle that will likely define the coming decade.