The U.S. Justice Dept. today filed, at long last, an antitrust lawsuit against the real estate software company RealPage. As reported by the New York Times, the lawsuit accuses the company “of facilitating a price-fixing conspiracy that boosted rents beyond market forces for millions of people. It’s the first major civil antitrust lawsuit where the role of an algorithm in pricing manipulation is central to the case.”
Such a lawsuit has been nearly two years in the making, following extensive reporting by ProPublica in the fall of 2022 (as I reported here) that examined how reservation companies that aggregate data from hundreds of clients—in this case apartment buildings—can then “suggest” how rents might be adjusted and what occupancy rates should be targeted. That information, RealPage advertised, could help landlords earn 3% to 7% more than they would otherwise.
It doesn’t take much imagination to see how this sort of wink-wink price-fixing could be applied to any mass market that uses computerized data collection and algorithmically-driven communication with its primary customers. Indeed, the Times noted that in addition to the lawsuit against RealPage, both the Justice Department and the Federal Trade Commission have weighed in on private lawsuits against hotel companies that claim they’ve used similar algorithms to help determine room rates.
The private campground industry, suffering from a country bumpkin self-image within the “hospitality industry” to which it aspires, has uncritically adopted any number of its supposedly more sophisticated counterparts’ practices. So, too, with dynamic pricing, and then with the very sort of algorithmically-derived “guidance” that now has RealPage in the feds’ crosshairs. The most egregious promoter of this sort of invitation to price collusion is CampSpot, if only because of its dominant position within the reservation software marketplace, but it isn’t alone.
RealPage and its imitators argue that their customers are not obliged to act on the information they provide, even as their marketing emphasizes how that information can maximize revenues—and as the cost of renting an apartment has spiraled steadily upward over the past four or five years. Campers and RVers similarly have lived through a near-doubling of rates since the pandemic, and while there are numerous factors accounting for that increase, industry-wide price-fixing undoubtedly is part of the mix.
Congress has been paying attention to the broader problem, and the anti-trust watchdogs are looking more closely as well. The FTC last month, for example, began a study of how financial firms like Mastercard, JPMorgan Chase and Accenture are using data from customers to set prices. Individual states are also starting to weigh in, with North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Washington and Tennessee—a grab-bag of red and blue—joining the federal suit against RealPage.
Against that backdrop, the campground industry and CampSpot are insignificant economic gnats that may get by for years before someone tries to swat them. Or not. Algorithms do not operate in a law-free zone, a federal lawyer said at today’s news conference announcing the lawsuit. “After all, humans create them. Our laws will always apply to the people behind the machines and the companies behind the algorithms.”
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