Key facts
- A federal judge blocked New York's law banning algorithmic rent-setting software.
A federal judge has blocked New York state from enforcing a law that would have prohibited landlords from using algorithmic pricing tools to set residential rents. The judge ruled that the law likely violated free speech rights by restricting the use of software like RealPage's.
The ruling impacts the ability of states to regulate the use of technology in pricing, particularly in sectors like real estate where affordability is a major concern. It raises questions about the balance between free speech rights and consumer protection against potentially anticompetitive practices facilitated by software.
A federal judge in Manhattan has blocked New York state from enforcing a law that would have prohibited landlords and real estate professionals from using algorithmic pricing tools to set residential rents. US District Judge Valerie Caproni issued a preliminary injunction on Tuesday, siding with RealPage, a software provider owned by private equity firm Thoma Bravo.
RealPage argued that the law violated its First Amendment free speech rights by restricting the use of its software's pricing recommendations. The antitrust law was signed in October by Governor Kathy Hochul and sponsored by Brad Hoylman-Sigal, then a state senator and now Manhattan borough president. Hoylman-Sigal stated the law would help New York crack down on practices that artificially inflated rents and made living in the state unaffordable.
In her decision, Caproni said that while it was a "close call," RealPage was "marginally" likely to show that the law was unconstitutional. She wrote that the statute prohibits normal commercial conduct just because it is facilitated by software, and that considering prices charged by competitors is normal business practice.
The office of New York Attorney General Letitia James defended the law, asserting that the state could regulate anticompetitive conduct by technology companies that "wreaked havoc" on the housing rental market and that the law regulated conduct rather than protected speech. James' office declined to comment on Wednesday. Hoylman-Sigal's office and a RealPage spokesperson did not immediately respond to requests for comment.
RealPage had sued two days after reaching a settlement with the US Department of Justice and agreeing to restrict its algorithmic software from using non-public data from competitors to generate price recommendations.
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