Dive Brief:
- Richardson, Texas-based data and software firm RealPage’s customers have the ability to receive rent recommendations calculated without nonpublic information, according to a RealPage press release.
- The move comes after the San Francisco Board of Supervisors passed an ordinance on Sept. 3 banning housing providers in the city from using certain software and algorithms to help set rents.
- To comply with the law, RealPage is eliminating the use of nonpublic competitor data of non-user properties for rent recommendations in San Francisco. The company said its revenue management products are similarly configurable in any other jurisdiction.
Dive Insight:
In its announcement, RealPage reiterated its contention that its use of nonpublic data is “highly aggregated, anonymized and blended” in a way that leads to more competitive pricing.
On a call with media last week after the Department of Justice and eight states filed a lawsuit against the firm alleging that it violated the Sherman Act, Stephen Weissman, an antitrust attorney for Gibson Dunn, which represents the firm, said that nonpublic data “yields lower advertised rents.”
Weissman said much of the data that RealPage collects isn’t used in its pricing recommendations, which are weighted by public and private information that comes from signed lease prices. He said clients have no idea what competitive information is included in the mix.
San Jose, California, soon may follow San Francisco in limiting rental algorithms. Three councilmembers recently proposed banning rent or occupancy-setting tools like RealPage, according to The East Bay Times.
Data questions
Though lawsuits and news reports have questioned RealPage’s use of nonpublic data, the practice isn’t illegal provided the data is handled correctly, according to Michelle Lowery, a partner who focuses on antitrust and competition matters at Chicago-based law firm McDermott Will & Emery.
Lowery thinks the DOJ may be bringing the case against RealPage as a warning to companies to look closely at what data is being provided, who has access to it and how it is being used.
In February 2023, the Antitrust Division of the DOJ announced that it had withdrawn three policy statements that had established safe harbors for the exchange of competitively sensitive information and benchmarking exercises around data sharing. That decision left uncertainty in the market, according to Lowery.
“I think those guidelines were withdrawn because politically, the administration is pushing boundaries when it comes to antitrust,” Lowery said. “But also, I think that data has evolved in such ways that they realize that even if you comply with all of the prior safe harbor provisions, so to speak, you still might be able to use data anti-competitively.”
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