San Francisco’s Board of Supervisors became the first major municipality to vote against landlords’ use of “price-gouging software,” including the popular platform RealPage, which is already facing sprawling antitrust lawsuits backed by the Department of Justice.
The ordinance, which would “prohibit the sale or use of algorithmic devices to set rents or manage occupancy levels,” passed 10-0 in a preliminary hearing on Tuesday.
“This collusive price-fixing, price-gouging software will be determined to be illegal,” board member and mayoral candidate Aaron Peskin said, per Bloomberg. “Meanwhile, we are leading the nation in saying ‘can’t do it here.'”
Artificial intelligence-powered software platforms like RealPage, RENTMaximizer, and others have faced scrutiny from critics, including the Federal Trade Commission, for accelerating price-fixing efforts by landlords around the country.
“You can’t use an algorithm to evade the law banning price-fixing agreements,” FTC officials wrote in a March announcement. “Efforts to fight collusion are even more critical given private equity-backed consolidation among landlords and property management companies.”
Rental management companies have shot back at accusations of price gouging, including RealPage, which denied allegations and claimed it only controlled 10% of the San Francisco rental market.
“While we share the San Francisco Board of Supervisors’ goal of helping renters, this ordinance will do nothing to make housing more affordable in the city,” RealPage spokesperson Jennifer Bowcock told Bloomberg. “We encourage the Board of Supervisors to identify real solutions to increase the supply of rental housing and access to affordable housing.”
Per Bloomberg, upwards of 70% of rental properties in the city rely on management platforms that often algorithmically maximize revenue.
The city, one of countless in the country in the grips of a historic housing affordability crisis, has missed key housing construction goals set by the state of California to combat shortages that drive cost surges, prompting the state’s controversial “builder’s remedy” to go into effect last month.