RealPage has reconfigured its revenue management products after San Francisco bans rent-setting software in a direct attack on the Richardson, Texas-based company.
RealPage announced Thursday that it is offering its revenue management software customers the ability to opt out of using blended private data from competing companies in the calculations it provides to help set rents. RealPage customers are multifamily owners and managers of apartment properties in the U.S.
The announcement follows an ordinance passed on September 3 by the San Francisco Board of Supervisors banning San Francisco housing providers from using certain software and algorithms to help set rents. The ordinance specifically targets RealPage, even though the company’s three revenue management software products collectively serve only ten percent of the city’s rental housing units.
RealPage stated that its software is expressly built to be legally compliant and can be configured to remain so as laws and policies change by using public data with or without blended non-public data.
To meet San Francisco’s new ordinance, RealPage is removing the use of nonpublic competitor’s data of non-user properties in San Francisco, but claims the ordinance will do nothing to make housing more affordable in the city, where there is a severe shortage of rental units that needs to be addressed.
“The San Francisco ordinance’s misplaced focus on nonpublic information is a distraction that will only make San Francisco’s historical problems worse by banning an important component of pricing technology that RealPage uses responsibly and that benefits residents, property managers and the rental housing ecosystem as a whole,” said RealPage in its announcement.
Hours after RealPage’s announcement, The Mercury News reported that San Jose is considering implementing a ban similar to San Francisco’s. San Francisco’s preliminary ordinance would allow attorneys and tenants to file civil action against landlords who are caught using the software, with penalties of up to $1,000 per violation, though how they would be caught is not laid out.
Just two weeks prior to the San Francisco ordinance, the U.S. Department of Justice filed an antitrust suit against RealPage, alleging its revenue management products violate the Sherman Anitrust Act by stifling competition and enabling apartment owners to artificially raise rents.
The lawsuit falsely claims RealPage controls 80 percent of the nation’s rental housing market, when the software is used to help set rents for 16 million out 50 million rental units in the nation.
The editorial board of the Wall Street Journal (WSJ), which has been following the Biden Administration’s attack on algorithms used in business, wrote an opinion piece about the DOJ’s legal attack on RealPage. The editors called the DOJ’s lawsuit an attempt to distract voters from frustration over the Biden Administration’s inflationary policies.
“It doesn’t require a Ph.D. in economics to understand that ballooning rents are caused by demand exceeding supply. Higher interest rates have caused more Americans to rent while local government zoning and rent controls restrict supply,” said the editors.
Meanwhile, the Justice Department has intimated that rental housing will not be the last industry to come under scrutiny for the use of artificial intelligence algorithms.
“As usual, politicians blame businesses rather than fix their own misguided policies,” wrote the WSJ editors.
