Welcome to The Corner. In this issue, we examine how RealPage, the target of a series of lawsuits for its algorithmic rent-setting software, has begun weaponizing the First Amendment to fend off moves to ban its software, most recently in Berkeley, California.

RealPage Claims Berkeley Ban on Algorithmic Rent-Setting Violated Its Free Speech

Megha Nagaram

Property management software company RealPage recently challenged a city ordinance in Berkeley, California, that banned the use of algorithmic rent-setting tools, claiming the ban violated its right to free speech. RealPage’s suit against Berkeley appears to have succeeded in discouraging other local and state governments from enacting similar laws that ban the use of its products.

The suit, filed April 2, is the first time RealPage has invoked the First Amendment in its defense, marking a shift in the corporation’s response to a series of lawsuits by the Justice Department and individual states charging the firm with violating antitrust law. The new strategy reflects a broader trend in which large businesses ground their legal defenses on a 2010 Supreme Court decision — Citizens United v. FEC — that extended First Amendment protections to corporations.

The DOJ’s case against RealPage dates to August 2024 and alleges that RealPage was operating an unlawful information-sharing scheme in violation of antitrust laws. Eight states — including California and Colorado — joined the DOJ in the suit. That lawsuit followed earlier cases by the District of Columbia and Arizona. In addition, over 30 cases brought by individual plaintiffs have been consolidated into another antitrust suit against RealPage.

The suits by DC and Arizona offer particularly rich detail on RealPage’s actions. According to those complaints, RealPage’s property management software requires landlords to share sensitive data [[link removed]] such as “occupancy rates, rents charged for each unit and each floorplan, lease terms, amenities, move-in dates, and move-out dates.” RealPage then inputs this data into an algorithm that sets [[link removed]] prices for each lease for each user. According to the suits, RealPage helps landlords set rents for as many as 16 million rental units [[link removed]] nationwide.

The two suits also provide a clear view of the harms. According to analysis done by the Biden White House Council of Economic Advisers, [[link removed]] RealPage’s system resulted in renters across the U.S. paying an extra $3.8 billion [[link removed]] in rent just in 2023. The Arizona complaint [[link removed]] found that renters were overpaying by 12%-13% of their rent.

RealPage contends in its complaint against the Berkeley that its recommendations are simply “rental advice” and that a prohibition of such advice is an unconstitutional suppression of speech. The Arizona lawsuit, however, estimates [[link removed]] that landlords follow RealPage’s recommendations over 90% of the time due to multiple forms of pressure.

According to the Arizona lawsuit, landlords that deviate too often from RealPage’s recommended rents face the threat of being terminated from the RealPage system. In addition, RealPage encourages landlords to automatically accept their prices and also employs “pricing advisors” to ensure compliance. Thus, RealPage not only sets the rental prices but works to ensure landlord compliance with the prices.

RealPage takes great care in its complaint against Berkeley to distinguish its recommendations from “commercialspeech,” which is afforded a lesser degree of protection under the First Amendment. And while RealPage does acknowledge that “preventing collusion among competitors and constraining the rate of rent increases are sufficiently compelling government interests,” they argue that the Berkeley city ordinance is overbroad because it is designed to address more than merely collusion and rising rents.

Berkeley’s existing set of rental market policies appears to have helped ensure the city’s economic and racial diversity, in part by preventing the sort of price spikes experienced in other parts of California. At present, [[link removed]]57% of the city’s population are renters. Of these, 60% are low-income and half already pay at least 30% of their income on rent. Meanwhile, about half of Berkeley’s population is non-white, and roughly three-quarters of this population rent rather than own their own homes. Rents in the East Bay have gone up 19% [[link removed]] in the past nine years.

RealPage’s new legal offensive already appears to be having a chilling effect on other local and state governments. Two weeks after RealPage filed its suit against Berkeley, the city council in Portland, Oregon, decided against passing a similar ordinance to ban the use of rent-setting algorithms, citing the Berkeley suit as a reason to send the ordinance back to committee. At a hearing for the ordinance, Open Markets Institute’s chief economist Brian Callaci testified that rent-setting algorithms drive rents higher, while a lobbyist representing RealPage testified that a ban would result in expensive litigation.

Following Portland’s retreat, Colorado governor Jared Polis vetoed a bill that would have established the first statewide ban on the use of rent-setting algorithms. Citing the ongoing litigation, Polis said he would like to see how the case plays out.

Open Markets Files Amicus Brief in Ninth Circuit Challenging Surgical Robot Monopoly

The Open Markets Institute filed an amicus brief [[link removed]] in the Ninth Circuit Court of Appeals arguing that Intuitive Surgical is abusing its dominance over surgical robots to monopolize the market for essential accessories and repair services. Intuitive holds a 99% share in the market for robots used to perform minimally invasive soft-tissue surgery, such as hernia repairs and tumor resections.

The brief, authored by OMI’s legal director Sandeep Vaheesan and policy counsel Tara Pincock, urges the court to reverse a district court ruling that allows Intuitive to continue blocking independent servicing of the EndoWrist, an essential accessory for using its da Vinci robot in surgical procedures. Speaking about the case, Vaheesan said, “The outcome…could decide whether other monopolistic manufacturers are allowed to freely take over markets for parts and service at the expense of independent rivals and consumers.” Read the full brief here [[link removed]].

📝 WHAT WE'VE BEEN UP TO: South Korean magazine Tongsang [[link removed]] featured an interview on digital trade with Open Markets Institute’s industrial program manager Audrey Stienon, in which she emphasized the importance of global agreements like the Digital Economy Partnership Agreement and the Digital Trade Agreement in regulating cross-border data flows. “The challenge for governments is to shift the conversation on the global digital economy away from a narrow focus on promoting unrestricted trade in data as an end unto itself, and instead towards a discussion about how governments can cooperate to best structure global digital markets so that they create opportunities for stakeholders from across industries, and around the world,” Stienon said. Tongsang is published by the Korean Ministry of Trade, Industry, and Energy.

Open Markets Institute joined [[link removed]] more than 90 public interest groups to launch the People’s AI Action Plan [[link removed]], a coordinated call for an AI agenda that prioritizes the public good over corporate interests. The People’s AI Action Plan comes in response to the Trump administration’s industry-backed America’s AI Action Plan [[link removed]]. The coalition warns that unchecked AI deployment could worsen inequality, weaken free speech, and jeopardize public goods. As part of the initiative, Open Markets contributed a report coauthored with Mozilla, “ Stopping [[link removed]] Big Tech from Becoming Big AI [[link removed]],” which outlines steps to block anticompetitive mergers, prevent dominance across the AI stack, and guarantee equitable access to critical AI infrastructure. The launch of the People’s AI Action Plan received coverage in Washington Post [[link removed]] and Common Dreams [[link removed]].

Open Markets Institute’s executive director Barry Lynn issued a statement [[link removed]] condemning the Federal Communications Commission’s 2-1 decision to approve Skydance’s acquisition of Paramount, criticizing the companies’ “self-censorshipand pay-off” of the Trump administration as emblematic of a broader assault on free speech and the press. Lynn placed the merger within a historical context of pro-monopoly policy failures under Reagan and Clinton that empowered Big Tech gatekeepers like Google and Facebook, which he said, “starved American newspapers and broadcasters of the ad dollars on which they always depended, and directly suppressed the ability of readers and viewers to connect with the reporters and publishers of their choice.”

Financial Times [[link removed]] quoted Open Markets Europe director Max von Thun calling for Europe to build a resilient digital sector independent of U.S. tech dominance. He also cautioned against Big Tech initiatives to offer European governments sovereign cloud options, which he calls “sovereignty washing,” warning Europeans “not to trust or treat it as a substitute for the actions needed to ensure true digital sovereignty.”

Vox [[link removed]] quoted Open Markets Institute’s chief economist Brian Callaci on personalized pricing, a practice where companies charge different consumers different prices. “Just because the technology exists, we don't just have to let companies do what's most profitable for them… capitalism should be working for us and not the other way around.”

Open Markets senior legal analyst Daniel Hanley was quoted in Ars Technica [[link removed]] on DOJ Antitrust Division head Gail Slater’s apparent frustration over T-Mobile’s merger with US Cellular. In closing an investigation into the deal, Slater released a statement decrying the oligopoly that controls America’s mobile wireless spectrum. Hanley noted that Slater could have taken a stronger stance. "If she isn't allowed to do the job Congress entrusted her with, then she can leave with her principles intact," he said.

Claire Kelloway, food program manager at the Open Markets Institute, was quoted in Voice of Alexandria [[link removed]] on agricultural consolidation and the need for right-to-repair laws to challenge the dominance of companies like John Deere. "When you reach these certain levels of concentration, bad things tend to happen for competitors, for consumers, for the market in general," Kelloway said.

The Atlantic [[link removed]] cited an article in Boston Review [[link removed]] written by OMI legal director Sandeep Vaheesan critiquing the widely readbook Abundance for its deference to private capital.

🔊 ANTI-MONOPOLY RISING:

Gaming studio Epic won an appeal at the ninth federal circuit court of its victory against Google in a long-running case over the tech giant’s monopolistic app store and payment system practices. ( The [[link removed]] Verge [[link removed]])

European Union regulators accused Chinese e-commerce giant Temu of systematically failing to stop the sale of illegal and counterfeit items on its platform, in a violation of the Digital Services Act. ( Associated [[link removed]] Press [[link removed]])

Colorado is set to become the second state in the nation after Washington to require merging companies to submit relevant filings to the state government when the Uniform Pre-Merger Notification Act takes effect in early August. ( National [[link removed]] Law Review [[link removed]])

Spain’s competition regulator is broadening an investigation into Apple’s app store practices by studying whether Apple is pushing developers to benchmark their prices for subscriptions and services based on in-house set standards. ( Wall [[link removed]] Street Journal [[link removed]])

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

DONATE [[link removed]] 📈 VITAL STAT: $200 Billion

The combined market value of Union Pacific and Norfolk Southern, which are in advanced merger talks to create the country’s first transcontinental railroad operator. The merger would mark the railroad industry’s largest ever deal. ( Bloomberg [[link removed]])

📚 WHAT WE'RE READING:

Homes for Living: The Fight for Social Housing and a New American Commons [[link removed]] — Historian and urban planner Jonathan Tarleton uses the stories of residents of two housing cooperatives in Brooklyn and Manhattan to explore the way the housing crisis impacts working class people in America’s most expensive cities. As social housing investments dwindle and rent stabilizations become weaker, Tarleton deftly explores the struggle existing tenants face over financial incentives to eliminate affordability protections versus their sense of obligation to future working class families.

Order Legal Director Sandeep Vaheesan’s new book:

Sandeep Vaheesan, the legal director at the Open Markets Institute, published his first book Democracy in Power: A History of Electrification in the United States [[link removed]] on December 3, 2024. Vaheesan examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives.

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