Algorithmic rent pricing is software that recommends the rent for each flat in a building, using data about demand, empty flats and the rents that other landlords charge. It is a part of some property management software. It is used mainly by large apartment landlords in the United States, which is where the legal questions about it arose.
The idea comes from dynamic pricing, in which a seller changes its prices as demand changes. Hotels and airlines do this every day. A large American landlord may own thousands of flats. Each month, some leases end and some flats stand empty. The software looks at how many people are asking about flats, how many flats are empty, and what similar flats rent for. Then it recommends a rent for each flat that comes up for lease.
The legal question is about where the data on other landlords comes from. Consider a city in the United States where five large landlords own most of the new apartment buildings. All five use the same pricing software. Each landlord sends the software its own private data: the rent each tenant actually pays and the number of flats it has empty. A two-bedroom flat in one building rents for $1,750 a month. The software reads the private rents of the other four landlords' similar flats, and recommends $1,850. It recommends similar increases to the other four. If most landlords accept most recommendations, rents across the city rise together, as if the landlords had agreed on them.
Competitors are not allowed to agree on prices. A group of competitors that agrees on prices instead of competing is called a cartel. American regulators argued that pooling private data through one algorithm can produce the same result as a cartel, even if the landlords never meet or agree on anything directly. The software company and the landlords argued that the software only recommends a price and that each landlord decides. The case showed that software which sets prices raises questions of competition law.
India has not had such a case about rent. Most Indian rents are agreed between an owner and a tenant, often through a broker or a real estate portal. But India's Competition Act would apply in the same way, because it also forbids competitors from agreeing on prices.
How is this different from competitor price monitoring or hotel revenue management? Those tools use a seller's own data and the prices that rivals show publicly. The rent case was about rivals' private data, combined in one place.