RealPage Strikes Landmark Deal With Federal Government To Settle Antitrust Claims

RealPage reached a deal to resolve the federal government's allegations that its software helped competing landlords coordinate rents. 

The Texas-based software company wouldn’t admit to any liability as part of the agreement, which needs sign-off from a judge, but will agree to implement changes to its widely used property and portfolio management software called AI Revenue Management.

The deal, which comes less than two weeks after RealPage abruptly replaced its CEO, would end RealPage’s antitrust litigation with the federal government. The Thoma Bravo-backed software firm is still being sued by a group of state attorneys general in the same civil case, being heard in a North Carolina court, and is facing a separate class-action lawsuit in Nashville. 

As part of the antitrust settlement, RealPage agreed to cooperate in the North Carolina case. Both the Department of Justice and RealPage released statements describing the deal.

“Competing companies must make independent pricing decisions, and with the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement,” Assistant Attorney General Abigail Slater said in a statement.

The deal includes no monetary penalty but requires RealPage to make changes to how its AI Revenue Management software, previously known as Yieldstar, suggests rents for its customers, including many of the country’s largest landlords. 

RealPage will stop using competitors’ nonpublic, competitively sensitive information in its daily “runtime operation” to adjust proposed rental terms. It will remove any feature that allows property managers to automatically accept proposed rents unless the customer has manually set the auto-accept parameters, and the deal prohibits any incentives or mechanisms that pressure clients to follow the software’s recommendations.

It is also barred from using models based on nonpublic data that home in on “geographic effects” narrower than state-level, which is broader than the markets alleged in the complaint.

RealPage will be prohibited from conducting market surveys and will not be allowed to solicit data that could be used to inform rents. A court-appointed monitor would verify compliance.

“This resolution with the DOJ was necessary to provide certainty and finality for RealPage and its customers to avoid protracted litigation,” Stephen Weissman, a partner at Gibson Dunn representing RealPage, said in a statement.

In a fact sheet to clients released by RealPage after the decision, the firm said the settlement would lead to “limited product adjustments, most of which align with existing practices or confirm how RealPage already operates.”

It said its revenue management products are “already, or imminently will be, aligned” with the terms of the settlement. 

The software firm will be able to mix data from all of its customers, including nonpublic data, to train updated versions of the artificial intelligence model that powers its rent-suggesting tool so long as that the data is at least a year old. 

RealPage, whose products touch millions of apartments around the country, has previously said it was using older data for training models and on Monday reiterated that it was committed to leveraging AI to enhance all of its software.

“[DOJ representatives] were reasonable in their negotiating style, including in the use of nonpublic data in certain situations including model training,” a source familiar with the matter told Bisnow Monday night. 

RealPage has been fighting a multifront war with regulators, state lawmakers and public opinion following a 2022 ProPublica investigation that alleged its software was being leveraged by landlords to effectively create local rent-setting cartels. 

More than two dozen landlords and property managers have already struck deals with attorneys general in the North Carolina case, but RealPage and more than a dozen other firms continue to litigate the case. 

RealPage made its first deal with a state over its algorithmic rent-setting software in September, agreeing to limit the types of data it uses to suggest rents in Nevada and to make a one-time, $200K contribution to state rental assistance programs. 

But state and local politicians have continued to target the company’s software in what RealPage has consistently said were attempts to score political points rather than offer solutions to the country’s affordability crisis. 

“We are convinced that RealPage is part of the solution to addressing the cost of housing, helping operators make informed, independent decisions in a complex housing market,” CEO Dirk Wakeham said in a statement. 

Wakeham took over the firm on Nov. 12, the same day RealPage announced, without explanation, the exit of then-CEO Dana Jones.

If approved, the settlement would be in force for seven years, although the government has the option to end its oversight after four years.