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A Federal Judge Blocked New York's Ban on Rent-Setting Software, Calling It 'Normal Commercial Conduct' That Happens to Run on Software · Minds, Bodies, and Terawatts

• 0:00
  [Host] This is Minds, Bodies, and Terawatts, the show where the software pricing your apartment says it's only giving advice. Reuters reported on Wednesday, September thirtieth, that a federal judge in Manhattan blocked New York from enforcing the first state law in the country that bans landlords from using pricing software to set rents.
• 0:17
  [Guest] The company that sued is RealPage. Landlords feed its software their numbers, and it recommends what to charge for each apartment and each renewal. RealPage told the court that a recommendation is speech, and that New York was punishing landlords for listening.
• 0:31
  [Host] Landlords all over town taking prices from the same program sounds like price fixing with extra steps. How is that free speech?
• 0:39
  [Guest] The judge, Valerie Caproni, never said price fixing is fine. She called the decision a close call and said RealPage is only marginally likely to win.
• 0:47
  [Host] Then what did she block it for?
• 0:50
  [Guest] For how much it sweeps in. The law covers any software that collects rent data from competing landlords and recommends a price. It doesn't care whether that data came out of a rival's private books or off the listings anybody can pull up on a phone.
• 1:05
  [Host] Why should I care which one it was? Either way a computer is telling my landlord to charge more.
• 1:11
  [Guest] Because one of them is what landlords have always done. Caproni wrote that there is nothing untoward about considering what competitors charge when you price your own product. Walking the block and reading the For Rent signs is legal, and she said the statute bans normal commercial conduct just because software does it.
• 1:29
  [Host] One landlord reading signs is one pair of eyes. This is a whole market of landlords asking the same machine, and I don't buy that it's the same thing.
• 1:39
  [Guest] That is New York's best argument. The attorney general's office told the court the law regulates what companies do, not what they say, and that these companies, in its words, wreaked havoc on the rental market. When the governor signed it last fall, her office put the cost to renters nationwide at about three point eight billion dollars a year.
• 1:59
  [Host] So what was the software doing to run up a number like that?
• 2:03
  [Guest] According to the Justice Department, reading the books and not the signs. Its lawsuit says RealPage collected private records from competing landlords, things like renewal rates and the discounts they offered, and used the pile to price everybody's units. RealPage denies that it fixes prices.
• 2:18
  [Host] Did that case go anywhere?
• 2:20
  [Guest] RealPage settled it last fall. It agreed to stop using one landlord's private numbers to price another landlord's building. It also can't switch on auto-accept by default anymore, the feature where the recommended price simply becomes the rent.
• 2:32
  [Host] So the advice could turn into my rent with nobody deciding?
• 2:36
  [Guest] Inside a range, yes, and now the landlord has to set that range by hand. Then, Reuters says, two days after settling with Washington, RealPage sued New York. It gave up the private books in one courtroom and defended its right to recommend in the other.
• 2:52
  [Host] So if New York had written its ban around the private books, would it have survived?
• 2:57
  [Guest] The ruling points that way, though she hasn't decided the whole case. Connecticut's ban covers only software fed with competitors' private data. New York's reaches so much further that, during the debate in Albany, one of the bill's own sponsors allowed it might catch a mom-and-pop landlord who asks ChatGPT what apartments nearby are going for.
• 3:16
  [Host] Okay, that one I wouldn't ban. But I rent, so what changes for me this week?
• 3:21
  [Guest] In New York, nothing, because the state had already paused enforcement while the case ran. The judge's order only reaches the part that punishes landlords. She left alone the part aimed at the companies selling the software, and the governor's office says it isn't backing down.
• 3:36
  [Host] Can I at least find out whether software priced my place?
• 3:40
  [Guest] Not from this ruling, though a different New York law survived its own free speech challenge about a year ago. It makes stores tell you when a price was set by an algorithm using your personal data. So a rule that makes the machine announce itself held up, and a rule telling landlords not to listen to it did not.
• 4:00
  [Host] A sign saying an algorithm set my rent doesn't lower my rent.
• 4:04
  [Guest] It doesn't, because knowing the machine is in the room gives you no say over what it recommends. And you can't shop your way around a price if the buildings near you are all asking the same adviser.
• 4:17
  [Host] Then what would a law that actually helps me look like?
• 4:20
  [Guest] It would follow the cost. RealPage can give advice up to the point where the bill for it lands on people who never agreed to it, and the settlement already marks that point, at the shared private books and the price that accepts itself. Aim there, and a judge has much less to call normal business.
• 4:39
  [Host] And until my state writes that law, the software keeps talking and my landlord keeps listening.
• 4:44
  [Guest] And you pay for the conversation. For more on where a company's freedom to advise ends and your rent begins, head to unscarcity dot ai. The book is on Amazon, the audiobook is on Spotify. This has been Minds, Bodies, and Terawatts.