HAL-9000, Image Courtesy Stanley Kubrick Productions
On October 23rd, SV@Home participated in a press conference by San Jose Councilmembers Ortiz and Cohen, calling for a ban on the use or sale of algorithmic rent-setting services in the city. Recently, several companies have introduced services that use software programs (sometimes referred to as “algorithmic devices”) that threaten to destabilize rental housing markets in cities nationwide. These services enable landlords to indirectly coordinate with one another through the sharing of both public and non-public competitively sensitive data, in order to artificially inflate rents and vacancy rates for rental housing. Participating landlords provide vast amounts of proprietary data to the programs, which in turn set or provide recommendations for rent and occupancy levels. Rent increases driven by algorithmic rent-setting services especially harm renters, but also landlords who are not using the technology. Some local jurisdictions have already taken action to ban the sale or use of this technology, including San Francisco.
Antitrust lawsuits have been filed against some of these companies, including RealPage, Inc. and Yardi Systems, Inc. The lawsuits allege that these companies are enabling and participating in a scheme of unlawful rent-fixing. These include a lawsuit filed by the District of Columbia Attorney General in November 2023, a lawsuit filed by the Arizona Attorney General in February 2024, and more than 20 federal private class action lawsuits filed nationwide that have been consolidated in the federal court in the Middle District of Tennessee. The United States Department of Justice recently filed a Statement of Interest in support of the efforts to regulate these companies.
The City of San Jose’s Rules Committee, which considers items to add to the City Council’s agenda, discussed the memo introduced by Councilmembers Ortiz and Cohen calling for a ban on the sale or use of algorithmic devices for the purpose of setting residential rents in the city. The proposed ban would bring relief to the city’s tenants as well as putting landlords who have been using these devices on equal footing with those who are willing to adhere to fair standards for setting rental rates. Ultimately, the Rules Committee decided not to bring the proposed ban to the full council for consideration but to monitor the progress of the ongoing antitrust lawsuits and any state or federal legislation to regulate the use of algorithmic rent-setting services. Check out this blog post from our partners at TechEquity Collaborative, who have been engaged in elevating the impacts of AI on residents and workers throughout California.