San Francisco targets ‘price-fixing’ rent-setting software

The San Francisco Board of Supervisors has become the first major municipality to vote against landlords using “price gouging software,” including the popular RealPage platform, which is already facing multiple antitrust lawsuits backed by the Justice Department.

The ordinance, which would “prohibit the sale or use of algorithmic devices to set rents or manage occupancy levels,” passed in a 10-0 vote at a preliminary hearing Tuesday.

“This collusive pricing, this pricing software, is going to be made illegal,” board member and mayoral candidate Aaron Peskin said, according to Bloomberg. “Meanwhile, we’re leading the nation in saying, ‘You can’t do this here.’”

AI-powered software platforms like RealPage, RENTMaximizer and others have drawn criticism from critics, including the Federal Trade Commission, for expediting landlord pricing actions across the country.

“You can’t use an algorithm to circumvent the law against price-fixing agreements,” FTC officials wrote in a March statement. “Efforts to combat collusion are even more critical given the consolidation fueled by private capital among landlords and property management companies.”

Rental management companies have responded to accusations of overcharging, including RealPage, which denied the allegations and said it controls only 10% of the San Francisco rental market.

“While we share the San Francisco Board of Supervisors’ goal of helping renters, this bill does nothing to make housing more affordable in the city,” RealPage spokeswoman Jennifer Bowcock told Bloomberg. “We encourage the Board of Supervisors to find real solutions to increase the supply of rental housing and access to affordable housing.”

According to Bloomberg, more than 70% of the city’s rental properties rely on management platforms that often algorithmically maximize revenue.

The city, one of countless in the country grappling with a historic housing affordability crisis, has failed to meet key housing targets set by the state of California to combat cost-escalating shortages, prompting the state to enact a controversial “developer remedy” last month.