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Tag: justice department

  • The Apartment Rental Market Is Rigged by Algorithms, a DOJ Lawsuit Alleges

    The Apartment Rental Market Is Rigged by Algorithms, a DOJ Lawsuit Alleges

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    If you’ve rented an apartment in the US in the last several years, you may have had the sense that the game was rigged: Prices creep up not only at your building but at others throughout the city, seemingly in lockstep. A new civil lawsuit brought by the US Department of Justice today alleges that in many cases it’s not just in your head—and that a single company’s algorithm is to blame.

    That company is RealPage, a Texas-based firm that provides commercial revenue management software for landlords. In other words, it helps set the prices of apartments. But it does so, the DOJ alleges in its lawsuit, by effectively helping its clients cheat; landlords feed rental rate and lease terms into the system, and the RealPage algorithm in turn spits out a suggested price that enables coordination and hinders competition.

    “By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices,” deputy attorney general Lisa Monaco said in a statement.

    RealPage’s reach is broad. It controls 80 percent of the market for software of its kind, which in turn is used to set prices of around three million units across the country, according to the DOJ. It already faces multiple lawsuits, including one from the state of Arizona and another in Washington, DC, where RealPage software is allegedly used to price more than 90 percent of units in large apartment buildings. RealPage’s algorithmic pricing first gained broader attention when a 2022 ProPublica investigation exposed how the company’s YieldStar software works.

    The DOJ civil lawsuit, which was joined by the attorneys general of eight states, is a significant escalation in legal action against the company. It’s also a first for the DOJ, according to officials speaking on background during a call to discuss the complaint. While the government had previously filed criminal charges against an Amazon seller for algorithm-enabled price-fixing, this is the first civil action in which the algorithm itself, the Justice Department official says, was effectively the means of the violation.

    The complaint itself quotes RealPage executives allegedly acknowledging anticompetitive aspects of its product. “There is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down,” one RealPage executive allegedly wrote.

    RealPage has repeatedly denied any allegations of antitrust violations, going so far as to publish a six-page digital pamphlet that claims to tell “The Real Story” about its products, along with an extensive FAQ page on a dedicated public policy website. “Attacks on the industry’s revenue management are based on demonstrably false information,” one section of that site reads. “RealPage revenue management software benefits both housing providers and residents.”

    The DOJ disagrees. “Algorithms don’t exist in a law-free zone,” said Monaco in a press conference to discuss the case. “Training a machine to break the law is still breaking the law.”

    This is a developing story. Please check back for updates.

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  • TikTok Sued by US Justice Department for Alleged Violations of Kids’ Privacy

    TikTok Sued by US Justice Department for Alleged Violations of Kids’ Privacy

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    In March 2019, TikTok agreed to a US federal court order barring the social media giant from collecting personal information from its youngest users without their parents’ consent. According to a new lawsuit filed by US authorities, TikTok immediately breached that order and now faces penalties of $51,744 per violation per day.

    TikTok “knowingly allowed children under 13 to create accounts in the regular TikTok experience and collected extensive personal information from those children without first providing parental notice or obtaining verifiable parental consent,” the US Department of Justice alleged on behalf of the Federal Trade Commission in a complaint lodged on Friday in federal court in California.

    TikTok spokesperson Michael Hughes says the company strongly disagrees with the allegations. He reiterates a statement the company issued in June, when the FTC had voted to sue, that many of the issues raised relate to “practices that are factually inaccurate or have been addressed.” Hughes adds that TikTok is “proud of our efforts to protect children, and we will continue to update and improve the platform.”

    Lawsuits over alleged violations of children’s privacy are almost a rite of passage for social platforms these days, with companies such as Google, Microsoft, and Epic Games collectively having paid hundreds of millions of dollars in penalties.

    But the case against TikTok also falls into the US government’s escalating battle with the service, whose ownership by China-based ByteDance has drawn national security concerns. Some US officials and lawmakers have said they worry about China exploiting TikTok to spread propaganda and gather data on vulnerable Americans. TikTok has refuted the concerns as baseless fear-mongering and is fighting a law that requires it to seek new ownership.

    The complaint filed on Friday alleges that as of 2020, TikTok wouldn’t let users sign up on their own if they entered a birthdate that showed they were under 13 years old. But it allowed those same users to go back, edit their birthdate, and sign up without parental permission.

    TikTok also wouldn’t remove accounts purporting to belong to children unless the user made an explicit admission of their age on their account, according to the lawsuit. TikTok’s hired content moderators allegedly spent just five to seven seconds on average reviewing accounts for age violations. “Defendants actively avoid deleting the accounts of users they know to be children,” the lawsuit states. Additionally, millions of accounts flagged as potentially belonging to children allegedly were never removed because of a bug in TikTok’s internal tools.

    The lawsuit acknowledges that TikTok improved some policies and processes over the years but that it still held on to and used personal information of children that it shouldn’t have had in the first place.

    Authorities also took issue with TikTok’s dedicated Kids Mode. The lawsuit alleges that TikTok gathered and shared information about children’s usage of the service and built profiles on them while misleading parents about the data collection. When parents tried to have data on their kids deleted, TikTok forced them to jump through unnecessary hoops, the lawsuit further alleges.

    TikTok should have known better, according to the government, because of the 2019 court order, which stemmed from TikTok’s predecessor—a service known as Musical.ly—allegedly violating a number of rules aimed at protecting children’s privacy. Those rules largely come from the Children’s Online Privacy Protection Act, a law dating to the late-1990s dotcom era that tried to create a safer environment for children on the web.

    Lawmakers in the US this year have been weighing a major update in the form of the Kids Online Safety Act, or KOSA. The proposed measure, which passed the Senate earlier this week, would require services like TikTok to better control kids’ usage. Detractors have said it would unfairly cut off some young populations, such as transgender kids, from vital support networks. KOSA’s fate remains uncertain. But as the case against TikTok allegedly shows, stricter rules may do little to stop companies from pursuing familiar tactics.

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