NEW YORK, Sept 30 (Reuters) – A \u2060federal \u2060judge in Manhattan blocked New \u2060York state from enforcing a first-of-its-kind law prohibiting landlords and \u200breal estate industry professionals from using algorithmic pricing tools to set, and potentially\u00a0inflate, residential rents.<\/p>\n
US\u00a0District \u200cJudge Valerie Caproni issued a \u200cpreliminary injunction on Tuesday in favor of\u00a0RealPage, a software provider owned by private \u2060equity firm \u2060Thoma Bravo, which said the law violated its First Amendment \u200bfree speech rights by restricting use of its software’s pricing recommendations.<\/p>\n
\u2022 The antitrust law was signed in October by Governor Kathy Hochul and sponsored by Brad Hoylman-Sigal, then a state \u200bsenator and now Manhattan borough president.<\/p>\n
\u2022 Hoylman-Sigal said the law would help New \u2060York \u2060crack down on practices that \u2060artificially inflated \u200brents and made living in the state unaffordable for many. The state put \u200bthe law on hold \u2060while\u00a0Caproni considered the case.<\/p>\n
\u2022 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.<\/p>\n
\u2022 “Under the rubric of preventing price fixing, the statute prohibits normal commercial conduct just because it \u2060is facilitated by software,” she wrote. “Whether one is considering a residential landlord or \u2060a manufacturer of widgets, there is nothing untoward about considering prices charged by competitors when deciding how to price one’s own product.”<\/p>\n
\u2022 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.<\/p>\n
\u2022 James’ office declined to comment on Wednesday. Hoylman-Sigal’s office did \u2060not immediately respond to requests for comment. A RealPage spokesperson had no immediate comment.<\/p>\n
\u2022 Richardson, Texas-based RealPage\u00a0sued two days after reaching a settlement with the\u00a0US\u00a0Department of Justice and agreeing to restrict its algorithmic software from using non-public \u200bdata from competitors to generate price recommendations.<\/p>\n
(Reporting by Jonathan Stempel \u200bin New York; Editing by Mark Porter)<\/p>\n
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