As I understand it, RealPage offers landlords software for renting out and managing their properties.  Like other such software across industries, it uses automation and analytics to help its clients conceptualize their assets and their businesses and squeeze out inefficiencies.  Among those services is an algorithm that uses local real estate data, including from its other customers, to help landlords set prices.

As this activist documentary video explains, the U.S. Justice Department — increasingly a partisan, ideological activist organization itself — has filed a lawsuit against the company alleging the algorithm creates a cartel in which landlords “collude to raise rents.”  Some clarity about what’s actually happening would be healthier for our country than the most-heated language the lawyers can find, because it seems to me the Justice Department has been corrupted into something like a civic autoimmune disorder, attacking the nation the federal government is supposed to serve.

Without ruling out cartel behavior by some other means, it seems to me that RealPage is simply offering a tool to more-accurately determine the actual market price of landlords’ assets.  At the moment, that results in higher rents, but that’s because progressive policy has driven the market price up.

Setting high prices is not “anti-competitive.”  Indeed, the opposite is one of the classic forms of genuinely anti-competitive behavior:  keeping prices artificially low so that competitors cannot compete.  Another form of anti-competitive behavior would be taking steps to prevent others from undercutting the high prices.

The activists, including the involved bureaucrats and attorneys general, elide the difference between price-setting and price-fixing.  Businesses typically do keep details of their pricing confidential, but they don’t have to, and price-setting uses available data to figure out what to charge customers.  Price-fixing, on the other hand, prevents others from charging less (or more) than the artificial price.

The video states RealPage’s recommended rent isn’t really a suggestion.  The company allegedly polices its customers’ rental prices and can, under some conditions, kick them off the platform.  Even so, however, landlords don’t have to join RealPage, and nothing prevents another company from offering software without the policing.

To be sure, in an environment of advanced analytics, artificial intelligence, and massive computing power, we must be vigilant for new ways of cheating, but the default assumption should not be that every advantage gained is a scam.  Rather, in the absence of evidence that rules are being broken, technology and techniques that provide an example should be considered innovations to imitate.  That’s competition.

Importantly, this does not have to go one way, and it shouldn’t be the end of the story.  As landlords use data to find the highest plausible market price, another tool could help renters find the market’s floor.  The more-accurately a community knows that range, the better it can balance the true cost of housing with other things and change policy.

Prices are simply an expression of value.  If the price of housing is higher than the value the community wants to devote to it, using government or (as the activist video supports) obscurity of information for price-fixing that is artificially low will add distortion when clarity is needed.  Too often, obscurity is the goal because the special interests involved want to hide the consequences of their own actions, such as the ill effects of housing regulation.

Addendum: For further consideration of the subject, we might ponder how RealPage’s approach differs from that of labor unions, particularly in the public sector, particularly in education.  Nobody in government seems to have a problem when they collude to leapfrog each other for pay and benefits.

Featured image: original photo by Justin Katz.