By Jonathan Stempel
NEW YORK, Sept 30 (Reuters) – A federal judge in Manhattan blocked New York state from enforcing a first-of-its-kind law prohibiting landlords and real estate industry professionals from using algorithmic pricing tools to set, and potentially inflate, residential rents.
US District Judge Valerie Caproni issued a preliminary injunction on Tuesday in favor of RealPage, a software provider owned by private equity firm Thoma Bravo, which said the law violated its First Amendment free speech rights by restricting 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 said the law would help New York crack down on practices that artificially inflated rents and made living in the state unaffordable for many. The state put the law on hold while Caproni considered the case.
• In her 27-page decision, Caproni said that while it was a “close call,” RealPage was “marginally” likely to show that the law was unconstitutional.
• “Under the rubric of preventing price fixing, the statute prohibits normal commercial conduct just because it is facilitated by software,” she wrote. “Whether one is considering a residential landlord or a manufacturer of widgets, there is nothing untoward about considering prices charged by competitors when deciding how to price one’s own product.”
• The office of New York Attorney General Letitia James defended the law, saying the state could regulate anticompetitive conduct by technology companies that “wreaked havoc” on the housing rental market. It also said the law regulated conduct rather than protected speech.
• James’ office declined to comment on Wednesday. Hoylman-Sigal’s office did not immediately respond to requests for comment. A RealPage spokesperson had no immediate comment.
• Richardson, Texas-based RealPage 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.
(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)
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