United States of America, et al. v. RealPage, Inc., et al.; Proposed Final Judgment and Competitive Impact Statement

DEPARTMENT OF JUSTICE Antitrust Division United States of America, et al. v. RealPage, Inc., et al.; Proposed Final Judgment and Competitive Impact Statement Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, Stipulation, and Competitive Impact Statement have been filed with the United States District Court for the Middle District of North Carolina in United States of America, et al. v. RealPage, Inc., et al., Civil Action No. 1:24-cv-00710. On January 7, 2025, the United States filed a Complaint alleging that Pinnacle Property Management Services, LLC's agreements with RealPage, Inc. and other landlords to share information and align pricing violate Section 1 of the Sherman Act, 15 U.S.C. 1. The proposed Final Judgment, filed on September 4, 2026, bars Pinnacle from licensing or using a revenue management software that relies on competitively sensitive data and prohibits Pinnacle from sharing competitively sensitive information with other landlords. Pinnacle must also establish an antitrust compliance policy and cooperate with the United States in this litigation. Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Antitrust Division's website at http://www.justice.gov/atr and at the Office of the Clerk of the United States District Court for the Middle District of North Carolina. Copies of these materials may be obtained from the Antitrust Division upon request and payment of the copying fee set by Department of Justice regulations. Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division's website, filed with the Court, and, under certain circumstances, published in the Federal Register . Comments should be submitted in English and directed to Danielle Hauck, Acting Chief, Technology and Digital Platforms Section, Antitrust Division, Department of Justice, 450 Fifth Street NW, Suite 7100, Washington, DC 20530 (email address: ATR.Public-Comments-Tunney-Act-MB@usdoj.gov ). Suzanne Morris, Deputy Director Civil Enforcement Operations, Antitrust Division. In the United States District Court for the Middle District of North Carolina United States of America, U.S. Department of Justice, Antitrust Division, 950 Pennsylvania Avenue NW, Washington, DC 20530, State of North Carolina, 114 W. Edenton Street, Raleigh, NC 27603, State of California, 300 South Spring Street, Suite 1702, Los Angeles, CA 90013, State of Colorado, 1300 Broadway, 7th Floor, Denver, CO 80203, State of Connecticut, 165 Capitol Avenue, Hartford, CT 06106, State of Illinois, 115 S. LaSalle St., Floor 23, Chicago, IL 60603, Commonwealth of Massachusetts, One Ashburton Place, 18th Floor, Boston, MA 02108, State of Minnesota, 445 Minnesota Street, St. Paul, MN 55101, State of Oregon, 100 SW Market St, Portland, OR 97201, State of Tennessee, P.O. Box 20207, Nashville, TN 37202, and, State of Washington, 800 Fifth Avenue, Suite 2000, Seattle, WA 98104-3188, Plaintiffs, v. REALPAGE, Inc., 2201 Lakeside Blvd., Richardson, TX 75082, Camden Property Trust, 11 Greenway Plaza, Ste. 2400, Houston, TX 77046, Cortland Management, LLC, 3424 Peachtree Rd., Ste. 300, Atlanta, GA 30326, Cushman & Wakefield, Inc., 225 W. Wacker Dr., Ste. 3000, Chicago, IL 60606, Greystar Real Estate Partners, LLC, 465 Meeting St., Ste. 500, Charleston, SC 29403, Livcor, LLC, 233 South Wacker Dr., Ste. 4700, Chicago, IL 60606, Pinnacle Property Management Services, LLC, 2401 Internet Blvd., Ste. 110, Frisco, TX 75034, and, Willow Bridge Property Company, LLC, 2000 McKinney Ave., Ste. 1100, Dallas, TX 75201, Defendants. AMENDED COMPLAINT Case No. 1:24-cv-00710-LCB-JLW JURY TRIAL DEMANDED Table of Contents I. Introduction II. RealPage's Revenue Management Software Is Fueled by Nonpublic, Competitively Sensitive Information Shared By Landlords A. Landlords Agree To Share Nonpublic, Competitively Sensitive Transactional Data With RealPage for Use in Generating Competitors' Pricing Recommendations B. AIRM and YieldStar Users Agree With RealPage To Use the Software To Align Pricing C. RealPage's Transactional Data Is Fundamentally Different From Other Data Available to Landlords D. RealPage Revenue Management Software Uses Nonpublic, Competitively Sensitive Data To Recommend Prices 1. AIRM and YieldStar Leverage Competitively Sensitive Data To Generate Price Recommendations (a) AIRM Model Training Relies on Competitively Sensitive Data To Generate Learned Parameters. (b) AIRM and Yieldstar Incorporate Competitors' Nonpublic Data To Generate Floor Plan Price Recommendations. (c) AIRM and Yieldstar Use Competitors' Nonpublic Data—Including Data On Future Occupancy—To Determine Unit-Level Prices. 2. LRO Relies Primarily on Landlords To Input Data on Competitors E. RealPage Uses Multiple Mechanisms To Increase Compliance With Price Recommendations 1. AIRM and YieldStar Make it Easy To Accept Recommendations and More Difficult and Time-Consuming To Decline 2. RealPage Pushes Clients To Adopt Auto-Accept Settings That Automatically Approve Recommendations 3. RealPage Pricing Advisors Provide a “Check and Balance” on Property Managers To Increase Acceptance of Recommendations 4. Pricing Recommendations Heavily Influence Landlords' Behavior III. Coordination Among Competing Landlords Is a Feature of This Industry A. Rental Housing Is a Necessity for Millions of Americans B. The Multifamily Property Industry Is Rife With Cooperation Among Ostensible Competitors 1. At the Local Level, the Multifamily Property Industry Comprises a Small Number of Large Landlords Managing Buildings With Different Owners 2. Landlords Regularly Discuss Competitively Sensitive Topics With Their Competitors and Swap Information 3. At RealPage User Group Meetings, Landlords Discuss Competitively Sensitive Topics C. RealPage Uses Nonpublic Information To Allow Landlords To More Easily Compare Units on an Apples-to-Apples Basis IV. RealPage Harms the Competitive Process and Renters By Entering Into Unlawful Agreements With Landlords To Share and Exploit Competitively Sensitive Data A. AIRM and YieldStar Have the Purpose and Effect of Distorting the Competitive Pricing of Apartments B. AIRM and YieldStar Impose Multiple Guardrails Intended to Artificially Keep Prices High or Minimize Price Decreases C. AIRM and YieldStar Harm the Competitive Process by Discouraging the Use of Discounts and Price Negotiations D. AIRM and YieldStar Increase and Maintain Landlords' Pricing Power by Using Competitors' Data To Manage Lease Expirations E. No Procompetitive Benefit Justifies, Much Less Outweighs, RealPage's Use of Competitively Sensitive Data To Align Competing Landlords V. RealPage Uses Landlords' Competitively Sensitive Data To Maintain Its Monopoly And Exclude Commercial Revenue Management Software Competitors A. Landlords Are Drawn to RealPage Because of Access to Nonpublic Transactional Data That Is Used To Increase Landlords' Revenue B. RealPage's Collection and Use of Competitively Sensitive Data Excludes Competition in Commercial Revenue Management Software VI. Relevant Markets A. Conventional Multifamily Rental Housing Markets 1. Product Markets (a) Conventional Multifamily Rentals Are Distinct From Other Types of Multifamily Housing (b) Single-Family Housing Is Not a Reasonable Substitute to Multifamily Rentals (c) Conventional Multifamily Rental Units With Different Bedroom Counts Are Relevant Product Markets 2. Geographic Markets (a) RealPage-Defined Submarkets Identify Relevant Geographic Markets (b) Core-Based Statistical Areas (CBSAs) Are Relevant Geographic Markets B. Commercial Revenue Management Software Market 1. Product Market 2. Geographic Market VII. Jurisdiction, Venue, and Commerce VIII. Violations Alleged IX. Request for Relief X. Demand for a Jury Trial Appendix A: Submarkets Appendix B: Submarkets By Bedroom Count I. Introduction 1. Renters are entitled to the benefits of vigorous competition among landlords. In prosperous times, that competition should limit rent hikes; in harder times, competition should bring down rent, making housing more affordable. RealPage has built a business out of frustrating the natural forces of competition. In its own words, “a rising tide raises all ships.” This is more than a marketing mantra. RealPage sells software to landlords that collects nonpublic information from competing landlords and uses that combined information to make pricing recommendations. In its own words, RealPage “ helps curb [landlords'] instincts to respond to down-market conditions by either dramatically lowering price or by holding price when they are losing velocity and/or occupancy. . . . Our tool [ ] ensures that [landlords] are driving every possible opportunity to increase price even in the most downward trending or unexpected conditions” (emphases added). 2. In fact, as RealPage's Vice President of Revenue Management Advisory Services described, “ 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” (emphasis added). As he put it, if enough landlords used RealPage's software, they would “ likely move in unison versus against each other” (emphasis added). To RealPage, the “greater good” is served by ensuring that otherwise competing landlords rob Americans of the fruits of competition—lower rental prices, better leasing terms, more concessions. At the same time, the landlords enjoy the benefits of coordinated pricing among competitors. 3. RealPage replaces competition with coordination. It substitutes unity for rivalry. It subverts competition and the competitive process. It does so openly and directly—and American renters are left paying the price. 4. Americans spend more money on housing than any other expense. On average, American households allocate more than one-third of their monthly income to housing. Some purchase a home, while others choose to, or must, rent. A family's selection of an apartment reflects a complex set of values and criteria including comfort, safety, access to schools, convenience, and critically, affordability. To ensure they secure the greatest value for their needs, renters rely on robust and fierce competition between landlords. 5. RealPage distorts that competition. Across America, RealPage sells landlords commercial revenue management software. RealPage develops, markets, and sells this software to enable landlords to sidestep vigorous competition to win renters' business. Many of the largest landlords in the United States, including Greystar, Camden, Cortland, Cushman & Wakefield and Pinnacle, LivCor, and Willow Bridge (collectively, Defendant Landlords), which would otherwise be competing with each other, submit or have submitted on a daily basis their competitively sensitive information to RealPage. 1 This nonpublic, material, and granular rental data includes, among other information, a landlord's rental prices from executed leases, lease terms, and future occupancy. RealPage collects a broad swath of such data from competing landlords, combines it, and feeds it to an algorithm. 1  As used in this Complaint, the term “landlord” refers to a variety of entities that are responsible for setting rents and other lease terms at multifamily properties, including owners, operators, and managers. 6. Based on this process and algorithm, RealPage provides daily, near real-time pricing “recommendations” back to competing landlords. These recommendations are based on the sensitive information of their rivals. But these are more than just “recommendations.” Because, in its own words, a “rising tide raises all ships,” RealPage monitors compliance by landlords to its recommendations. RealPage also reviews and weighs in on landlords' other policies, including trying to—and often succeeding in—ending renter-friendly concessions (like a free month's rent or waived fees) to attract or retain renters. A significant number of landlords then effectively agree to outsource their pricing function to RealPage with auto acceptance or other settings such that RealPage as a middleman, and not the free market, determines the price that a renter will pay. Competing landlords choose to share their information with RealPage to “eliminate the guessing game” about what their competitors are doing and ultimately take instructions from RealPage on how to make business decisions to “optimize”—or in reality, maximize—rents. 7. Each landlord pays steep fees to license RealPage's software. RealPage's stated goals and value proposition are not a secret. Its executives are blunt: They want landlords to “avoid the race to the bottom in down markets.” Sometimes RealPage is even more direct, acknowledging that its software is aimed at “driving every possible opportunity to increase price” or observing that among landlords, “there is a greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.” 8. But that is not how the free market works. A free market requires that landlords compete on the merits, not coordinate pricing. Landlords should win renters by offering whatever combination of price and quality they think is most attractive. For example, landlords could lower rents or provide other financial concessions, like free months of rent, or with investments in amenities like gyms, grilling areas, or pools. Put differently, the fear of losing a renter to a competitor should motivate rival landlords to compete vigorously. 9. RealPage's revenue management software ingests on a daily basis nonpublic rental rates, future apartment availability, and changes in competitors' rates and occupancy. As competitor-landlords increase their rents, RealPage's software nudges other competing landlords to increase their rents as well. RealPage calls this “maximiz[ing] opportunity[.]” As RealPage explained to one landlord, by using competitors' data, they can identify situations where “we may have a $50 increase instead of a $10 increase for that day.” This is what RealPage encourages as “stretch and pull pricing.” 10. RealPage allows landlords to manipulate, distort, and subvert market forces. One landlord observed that RealPage's software “can eliminate the guessing game” for landlords' pricing decisions. Discussing a different RealPage product, another landlord said: “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That's classic price fixing . . . .” A third landlord explained, “Our very first goal we came out with immediately out of the gate is that we will not be the reason any particular sub-market takes a rate dive. So for us our strategy was to hold steady and to keep an eye on the communities around us and our competitors.” 11. RealPage's scheme not only distorts competition to the detriment of renters, but also allows it to reinforce its dominant position in the market for commercial revenue management software. By its own account, RealPage controls at least 80 percent of that market. Its dominant position is protected by substantial data advantages due to its massive reservoir of ill-gotten competitively sensitive information from competing landlords. No other revenue management company can match RealPage's access to landlords' nonpublic, competitively sensitive rental data. This is why RealPage acknowledges that it “does not have any true competitors, mainly because our data is based on real lease transaction data.” RealPage's conduct is predatory and exclusionary, which has allowed it to distort the market opportunities for honest providers of revenue management software. 12. At bottom, RealPage is an algorithmic intermediary that collects, combines, and exploits landlords' competitively sensitive information. And in so doing, it enriches itself and compliant landlords, including Defendant Landlords, at the expense of renters who pay inflated prices and honest businesses that would otherwise compete. 13. The United States, and the States of North Carolina, California, Colorado, Connecticut, Illinois, Minnesota, Oregon, Tennessee, and Washington, and the Commonwealth of Massachusetts, acting by and through their respective Attorneys General, bring this action pursuant to Sections 1 and 2 of the Sherman Act to rid markets of (i) RealPage's and Defendant Landlords' unlawful information-sharing and pricing alignment schemes, and (ii) RealPage's illegal monopoly in commercial revenue management software. In so doing, Plaintiffs seek to restore the free market to deserving individuals, families, and honest businesses. II. Realpages's Revenue Management Software Is Fueled by Nonpublic, Competitively Sensitive Information Shared by Landlords 14. RealPage dominates the market for commercial revenue management software that landlords use to price apartments, controlling at least 80 percent of that market, according to its own estimates. RealPage currently offers three revenue management systems to landlords: YieldStar, AI Revenue Management (AIRM), and Lease Rent Options (LRO). The company's main legacy software, YieldStar, is the product of three acquisitions and subsequent internal development. Its successor, AIRM, uses much of the same codebase as YieldStar, but RealPage claims that AIRM's refined models and forecasting are more precise. RealPage acquired its other revenue management software, LRO, in 2017. RealPage has made plans to sunset both YieldStar and LRO by the end of 2024. 15. Competitively sensitive data collected from competing landlords is a critical input to RealPage's revenue management software. AIRM and YieldStar collect this data, such as rental applications, executed new leases, renewal offers and acceptances, and forward-looking occupancy, and use it to generate price recommendations for the competing landlords. This information is among the most competitively sensitive data a landlord maintains. 16. The exploitation of sensitive data from competing landlords is central to RealPage's approach. As part of pitching its software to landlords, RealPage highlights that its pricing algorithms use their competitors' data sourced directly from “lease transaction data.” RealPage describes this nonpublic data from competitors as one of three “building blocks of price” in AIRM and YieldStar. Landlords thus share their competitively sensitive information with RealPage with the understanding that RealPage's software will use the data to generate recommendations for rivals (and vice versa). A. Landlords Agree To Share Nonpublic, Competitively Sensitive Transactional Data With RealPage for Use in Generating Competitors' Pricing Recommendations 17. RealPage amasses nonpublic, competitively sensitive data from competing landlords through use of its pricing algorithms, other rental property software, and thousands of monthly phone calls. The combined troves of nonpublic, competitively sensitive data are much more granular, sensitive, timely, and comprehensive than alternatives—and far more detailed than any data publicly available to potential renters. RealPage then uses this data in generating competitors' pricing recommendations. 18. Data shared through YieldStar and AIRM. Each AIRM and YieldStar client agrees to share detailed data with RealPage that are private, updated nightly, and granular. The data includes lease-level information on each unit's effective rent (rent net of discounts), rent discounts, rent term, and lease status, as well as unit characteristics such as layout and amenities. It also includes the number of potential future renters who have visited a property or submitted a rental application. 19. Landlords understand that AIRM and YieldStar use their data to recommend prices not just for their own units, but also for competitors. For example, a revenue management director at Greystar testified that she understood that Greystar, and other competing landlords who used AIRM or YieldStar, agreed with RealPage to share their data, which was combined in a single data pool for use by YieldStar and AIRM. An executive at Willow Bridge noted the advantages to using YieldStar at a property if others in the property's submarket—the small geographic area around the property—also used YieldStar because “the shared data between the models at different communities can be a benefit in getting accurate transactional data on a timely basis.” 20. Landlords agree to provide this information for use by their competitors because they understand they will be able to leverage the sensitive information of their rivals in turn. In its pitch to prospective clients, RealPage describes AIRM's and YieldStar's access to competitors' granular, transactional data as a meaningful tool that it claims enables landlords to outperform their properties' competitors by 2-7%. RealPage clients receive training that highlights the role of competitors' transactional data in the price recommendation process. 21. Data Shared Through Other RealPage Products. AIRM and YieldStar are not the only ways that RealPage shares nonpublic, competitively sensitive information among landlords. RealPage obtains the same confidential transactional data from landlords that license at least three other programs: OneSite, Performance Analytics with Benchmarking, and Business Intelligence. 22. OneSite is RealPage's property management software, which operates as the central source of data for landlords' leasing activity. Performance Analytics with Benchmarking allows landlords to compare the performance of their properties and floor plans ( e.g., a one-bedroom, one-bathroom unit) to their competitors. Business Intelligence is a data analytics tool that pulls data from a landlord's property management software and other products. 23. Each landlord using RealPage's OneSite, Business Intelligence, and Performance Analytics with Benchmarking products agrees to share its proprietary data with RealPage and agrees that RealPage's revenue management software can use the data to generate pricing recommendations. The license agreements for these products specifically identify the shared data, such as pricing information, as confidential, nonpublic information. RealPage takes this deeply confidential information and uses it to provide rent recommendations to competitors of these clients. 24. These agreements grant RealPage access to confidential information from over 16 million units across the country, including many that do not use its revenue management products. With respect to Performance Analytics with Benchmarking alone, a RealPage sales representative told a prospective client that “we have over 16 million units of data coming from various source operating systems (PMS) [property management software] into the PAB platform,” making RealPage the top choice for “transactional data benchmarking.” With properties containing approximately 3 million units using AIRM and YieldStar, these additional agreements meaningfully multiply the scale of the transactional data used by AIRM and YieldStar. This gives RealPage greater visibility, including into markets with less penetration by AIRM and YieldStar, granting even initial AIRM and YieldStar adopters in a new market the benefit of access to a significant amount of nonpublic, competitively sensitive information. 25. Landlords understand that AIRM and YieldStar will use data from these products. A revenue management director at Greystar explained that RealPage ingests transactional data from several RealPage products, besides AIRM and YieldStar, for use in revenue management. A property owner requested information from Greystar on which competing properties used revenue management software. In an internal response, the Greystar director noted that RealPage has “access to more transactional history than anyone and [is] pulling data from anyone using RealPage products which includes companies who manually price or use other revenue management firms but leveraging their BI [Business Intelligence] products.” 26. A revenue management executive at Willow Bridge asked RealPage if other specific landlords were using RealPage's non-revenue management products. The landlord's owner client was concerned about the data available to YieldStar because competing properties were unsophisticated and did not use revenue management. This executive wanted to confirm that “YieldStar will be able to leverage actual transactional data behind the scenes and not just look at offered rents for their comps.” RealPage reminded the Willow Bridge executive that RealPage collected transactional data for all users of OneSite, Business Intelligence, and Performance Analytics with Benchmarking, and reassured the executive that YieldStar had ample transactional and survey data for that area. 27. Calling Landlords. RealPage has an additional, complementary product called Market Analytics. Market Analytics compiles data from over 50,000 monthly phone calls that RealPage makes to landlords across the country. On these calls RealPage collects nonpublic, competitively sensitive information by floor plan on occupancy rates, effective rents, and concessions, as well as information on the owner, management company, and any revenue management software used at the property. These market surveys cover over 11 million units and approximately 52,000 properties. Landlords, including but not limited to those that use AIRM, YieldStar, or other RealPage products, knowingly share this nonpublic information with RealPage. B. AIRM and YieldStar Users Agree With RealPage To Use the Software To Align Pricing 28. In addition to agreeing to share nonpublic, competitively sensitive data with RealPage, each AIRM and YieldStar licensee agrees with RealPage to use the AIRM or YieldStar pricing software as RealPage designed it. 2 Landlords are expected to review daily AIRM or YieldStar floor plan price recommendations and use the programs to set scheduled floor plan rents or even unit-level prices. 2  Defendants Camden, Cushman & Wakefield and Pinnacle, Greystar, LivCor, and Willow Bridge were active beta testers for AIRM and provided feedback to RealPage during the AIRM design process. 29. While landlords may not accept every price recommendation, they use AIRM or YieldStar as their pricing software, regularly review AIRM or YieldStar floor plan recommendations, use AIRM or YieldStar to set a scheduled floor plan rent, and use AIRM or YieldStar to set unit-level prices. 30. Landlords who use AIRM and YieldStar know that others are using the same software. Some landlords track which revenue management software their competitors use, including by contacting competing properties directly and exchanging nonpublic information. Other landlords, including prospective AIRM and YieldStar users, ask RealPage whether there are existing AIRM and YieldStar users nearby before they themselves license the products. 31. An executive at Willow Bridge, for example, explained to her team how she would learn from RealPage data or from a property's website whether a property used revenue management. This information is important because properties that use revenue management tend to update prices much more frequently, and so a landlord will react differently to those price changes if it knows the competitor is using revenue management. 32. RealPage frequently tells prospective and current clients that a “rising tide raises all ships.” A RealPage revenue management vice president explained that this phrase means that “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the industry down.” This rising tide lifts all landlords, including but not limited to AIRM and YieldStar users. 33. In using AIRM and YieldStar, landlords expect this pricing alignment and use RealPage software in part for this reason. One landlord echoed the RealPage executive, using the phrase “a rising tide rises [sic] all ships” to explain that AIRM would move prices in a “similar manner” to how the top and bottom of the market move. Elsewhere that same landlord noted that “if everyone in the market is doing well and everyone in the market has [sic] is having the rates go up, so should ours, right?” An employee at Willow Bridge referenced RealPage's use of the phrase “a rising tide raises all ships” to explain how AIRM would provide price recommendations that amplify market trends. Multiple landlords have expressed their preference that their competitors use YieldStar and AIRM because widespread use would benefit them all. An executive of one landlord (which itself uses YieldStar and AIRM) said in a 2021 earnings call that more sophisticated, “high-quality competition” was better for that landlord when “they all use revenue management. They are all smart. They raised rents when they should.” RealPage highlighted in promotional materials the sentiments of another landlord who noted, “It actually gives me chills to think about what a disadvantage we'd be at if we hadn't adopted YieldStar, knowing others are using it.” C. RealPage's Transactional Data Is Fundamentally Different From Other Data Available to Landlords 34. The data that RealPage uses and supplies is unique relative to public data available to landlords on listing or property websites. As compared to public data, RealPage data is much more granular, covers a broader array of business information, and includes competitively sensitive data across several dimensions. For example: • Information on Actual Transactions. RealPage's data include, for each lease, the unit, floor plan, listed rent, final transacted lease price (including any discounts), and lease term. • Renewals. RealPage's data include the same information for lease renewals. Information on renewals is not listed publicly—not even asking rents—leaving a significant blind spot for landlords not using RealPage. • Time Span. AIRM and YieldStar have access to current and historical lease data, from the previous day and going back two to three years. • Future Demand. The shared data further includes information on tenant demand, including detailed information on inquiries and applications by potential future tenants. • Accuracy. Landlords have greater assurance of the accuracy of the data because it comes directly from the landlords' own databases. • Coverage. The RealPage data covers millions of units from users of its revenue management software and other products. 35. RealPage touts how its data is different. As one RealPage pitch deck put it, “we have [the] most data and the best data.” And the “[q]uality of data is best in class given that it is `lease transaction data'—this provides insight into performance data from actual signed leases, both new and renewal, net effective of concessions.” Another noted that without YieldStar “you'll be pricing your renewals in the dark without insight into actual lease transaction data that YS uses to help you make pricing decisions. This is critical to price renewals right[,] especially in a downturn.” 36. Access to this data proves important in winning over revenue management clients, including skeptical ones. One RealPage senior manager noted that a “highly suspicious CFO” was won over in part by YieldStar's “lease transaction data” that allowed his company to “achieve what his people couldn't achieve on their own.” 37. One landlord explained the benefits of YieldStar to its owner clients by calling the use of competitors' transactional data a “game changer! We have 100% truth on [competitors'] activity powering YieldStar recommendations.” 38. Another landlord's internal training presentation on YieldStar highlighted the importance of having access to competitors' transactional data: EN18SE26.000 D. RealPage Revenue Management Software Uses Nonpublic, Competitively Sensitive Data To Recommend Prices 39. AIRM and YieldStar are built upon similar code and leverage competitive data in similar ways. LRO, on the other hand, was originally developed outside of RealPage and takes a different approach. 1. AIRM and YieldStar Leverage Competitively Sensitive Data to Generate Price Recommendations 40. AIRM uses competitors' nonpublic, transactional data in three separate stages of the pricing process: (1) model training, (2) floor plan price recommendations, and (3) unit-level prices. YieldStar uses competitors' nonpublic, transactional data in stages two and three of its process. (a) AIRM Model Training Relies on Competitively Sensitive Data To Generate Learned Parameters 41. In the first stage, RealPage trains its AIRM models using nonpublic data from OneSite and other property management software, totaling millions of executed lease transactions, new lead applicaEtions, renewal applications, and guest cards filled out by visiting potential tenants. This data is run through a machine learning model to generate learned parameters for supply and demand models that are then used for all AIRM clients across the country. Like the coefficients in a regression model, the learned parameters are applied to the data of a landlord's specific property, and to the data of its competitors, when AIRM makes pricing recommendations. RealPage generally retrains the models three to four times per year using updated nonpublic data. (b) AIRM and YieldStar Incorporate Competitors' Nonpublic Data To Generate Floor Plan Price Recommendations 42. In the second stage AIRM or YieldStar provides a price recommendation for every floor plan of a given property. A floor plan is a grouping of units that share similar characteristics, such as the number of bedrooms and bathrooms and square footage. Landlords define the floor plans in their buildings—for example, a large apartment building might have separate sets of floor plans for studios, one-bedroom, and two-bedroom apartments. As discussed below, AIRM and YieldStar use competitors' nonpublic, transactional data in nearly every step of setting a recommended floor plan price, including identifying peer properties, forecasting occupancy and leasing, increasing rents to match competitors' changes, and determining the magnitude of price changes. 43. Identifying Peers. First, AIRM and YieldStar use confidential transaction data to identify a property's peer properties, which include close competitors. In selecting peer properties, RealPage's algorithm generally looks for properties with similar floor plans, within close geographic proximity, and with similar effective rents over time. AIRM or YieldStar clients may review the list of peer properties and request that RealPage add or remove specific properties. 44. AIRM or YieldStar then uses the nonpublic data from competitors' executed leases to generate a market range chart for each floor plan. This chart identifies a “smoothed” market minimum effective rent and market maximum effective rent. The market minimum is a hard floor. AIRM and YieldStar will not recommend a rent below the market minimum. On the other hand, the market maximum is a “soft ceiling,” and the programs will recommend prices above the ceiling. 45. The client has access to the market range chart within the AIRM and YieldStar interfaces. As shown below, for each floor plan the client can see the smoothed market minimum and market maximum and where the client's own floor plan sits within the market range. EN18SE26.001 46. Forecasting Occupancy and Leasing. Every night, for each participating property, AIRM applies the model's learned parameters to that property's internal transactional data to forecast the number of expected vacancies and expected lease applications for a certain period into the future. AIRM may also use competitors' data to adjust the projected supply. 47. AIRM or YieldStar then determines whether actual leasing for a floor plan is on track to meet predicted leasing. To do so, it creates a forecast of the number of leases over time, using nonpublic lease and application data from the subject property, and potentially from so-called surrogate properties (similar properties in the surrounding area). 3 When there is an imbalance between a property's actual and forecasted leasing, it recommends a price change. 3  If there is insufficient historical data for a particular building, or floor plan within that building, RealPage will use data from what it calls a “surrogate property,” which is the confidential transactional data from another property with characteristics similar to the subject property. 48. Changing Rents to Match Competitors. Even when a property's supply and demand are balanced, RealPage's software will still recommend a price change, based on competitors' nonpublic data, when it determines that the market is moving. For example, if the minimum and maximum of the competing floor plans' effective rents increase, it will recommend a price increase to maintain the floor plan's market position (its price position relative to its competitors). 49. Determining Magnitude of Price Changes. Once AIRM or YieldStar has determined that it will recommend a price increase or a price decrease, it again uses competitors' transactional data to determine how much the price should move and provide a floor plan price recommendation. It uses nonpublic transactional data from peer properties, in addition to data from the subject property and surrogate properties, to generate a market response curve—analogous to a market demand curve—for every floor plan. This demand curve provides an estimate of how demand for particular apartments would change in response to changes in rents, a measure that RealPage calls elasticity. In other words, it uses competitors' nonpublic transactional data to calculate how many leases the property will likely gain or lose for a particular floor plan, for every price point along the curve. Using this data, AIRM or YieldStar can determine how much the price can increase and still achieve the target number of leases, or by how little price can decrease to maintain a target occupancy. 50. RealPage describes elasticity as a pivotal input into balancing supply and demand and, therefore, price. 51. The use of surrogate properties in this pricing process has the potential to push convergence on price even further. As two properties' surrogate sets become closer—and therefore their respective demand curves become more similar—AIRM and YieldStar will generate increasingly similar prices for the two properties. And the use of surrogates is common. One of the largest landlords in the country, for example, uses surrogates at over 80% of its properties. 52. This process repeats for every floor plan in the client's property, every night. A new floor plan price recommendation is generated daily. (c) AIRM and YieldStar Use Competitors' Nonpublic Data—Including Data on Future Occupancy—To Determine Unit-Level Prices. 53. A property manager at the landlord reviews each floor plan recommendation daily and enters the floor plan price. AIRM and YieldStar then use the floor plan price to generate prices for every unit within the floor plan. The unit price is shown in a pricing matrix, which provides the price for each combination of start date and lease term. To generate the price for an individual unit, the floor plan price is adjusted to account for unit-specific factors such as amenities ( e.g., a desirable view, the floor level, or an in-unit washer and dryer), staleness ( i.e., how long that specific unit has been vacant), and the timing of lease expirations. AIRM and YieldStar again use competitors' nonpublic data during this step in at least two ways. 54. First, AIRM and YieldStar use data on competitors' supply of multifamily housing to adjust recommendations to limit “exposure” with a feature called lease expiration management. Exposure refers to the number of units that are available for lease. Managing lease expirations is an important element of revenue management software. If too many leases expire and the corresponding units become available at the same time, supply increases and rents for those units will tend to drop. This process will also tend to repeat itself as the same units will become available at the same time a year later for leases with a standard twelve-month term. 55. The objective of expiration management is to smooth out this exposure so that landlords, as explained by one RealPage employee, “remain in a position of pricing power.” For example, if AIRM or YieldStar sees that a large number of units will likely be available in twelve months, it will increase the price recommendation for a twelve-month lease relative to price recommendations for leases of other terms, such as 11 months or 13 months, in order to nudge potential renters to accept those terms. Expiration management can only raise prices—AIRM does not lower a unit's price if the lease term would fall in an underexposed period. 56. This calculation does not rely only on the predicted future supply for the client's property. For any landlord who uses a “market seasonality” setting, AIRM and YieldStar also rely on competitors' transactional data and the supply for those competitors—including the supply of competitors' existing leases that expire in the future. AIRM and YieldStar thus work to manage lease expirations for the client's units based on how competitors' supply will change. RealPage strongly recommends to landlords that they use market seasonality. 57. The use of competitors' nonpublic data in expiration management to fill out the pricing matrix occurs regardless of whether the landlord accepts the AIRM or YieldStar recommendation. Thus, even if a landlord were to override every price recommendation, its rental prices would still be influenced by nonpublic information about its competitors' supply. 58. Second, AIRM and YieldStar include an amenity optimization feature. By pricing specific amenities within units, landlords can avoid making wholesale pricing changes to a floor plan if a specific unit fails to lease. Within the amenity analysis, AIRM and YieldStar provide market values for specific amenities to landlords, allowing them to compare their perceived value of an amenity with the nonpublic valuation of their competitors. The peer data include the market minimum and maximum value for specific amenities. 2. LRO Relies Primarily on Landlords To Input Data on Competitors 59. RealPage's LRO also provides pricing recommendations to users. Each week, LRO users manually input competitor information into the system that they have obtained from public websites or more questionable means, such as communicating directly with their competitors. 60. A small number of LRO users subscribe to a feature called AutoComp. With this feature, RealPage provides information on competitors' rents, traffic, and occupancy. This information comes from market surveys that RealPage compiles using call centers to call competitor properties. Landlords may use LRO without using AutoComp. E. RealPage Uses Multiple Mechanisms To Increase Compliance With Price Recommendations 61. AIRM and YieldStar provide daily price recommendations. RealPage has taken multiple steps to increase compliance with AIRM and YieldStar price recommendations. It designed AIRM and YieldStar to make it much easier to accept recommendations than to decline them. It built an auto-accept function and pushes clients to adopt it and increase its role. And its pricing advisors encourage landlords to follow AIRM and YieldStar pricing recommendations. Among their duties, pricing advisors review any request to override a price recommendation. 1. AIRM and YieldStar Make it Easy To Accept Recommendations and More Difficult and Time-Consuming To Decline 62. Every morning, the landlord's property manager chooses whether to accept the floor plan price recommendation, keep the previous day's rent, or override the recommendation. These options are the same for new leases and renewal leases. RealPage makes it easier and faster for a client to accept a recommendation than to decline it. When accepting recommendations, the manager can choose to do a bulk acceptance—she can accept all or multiple floor plan recommendations at once. But she cannot do the same when overriding, or rejecting, the recommendation. 63. Instead, for every recommendation that she does not accept—whether overriding or keeping the previous day's rent—the property manager must provide “specific business commentary” for diverging from the recommendation. This justification, RealPage instructs, should not be a mere preference for another price but must be based on a factor that the model cannot account for, such as local construction or renovations occurring in the building. It must be a “strong sound business minded approach.” 64. The property manager knows that these recommendation rejections and accompanying justifications will be sent to a RealPage pricing advisor. 4 If the pricing advisor disagrees with the rejection or justification, the disagreement is escalated for resolution to a landlord's regional manager, who typically supervises the property manager. 4  Some clients have internal revenue managers that are certified by RealPage. For those clients who have internalized the revenue management function, recommendation rejections may be routed to the internal revenue manager rather than a RealPage pricing advisor. 65. As one client who complained to RealPage explained, RealPage's design is “trying to persuade [clients] to take the recommendations (almost like we made it hard to do anything but).” 2. RealPage Pushes Clients To Adopt Auto-Accept Settings That Automatically Approve Recommendations 66. AIRM and YieldStar each include auto-accept functions. This functionality automatically accepts price recommendations falling within certain parameters. By default, AIRM and YieldStar set auto-accept parameters of a 3% daily change and an 8% weekly change. The landlord can change these parameters, disable or enable auto-accept, and even enable partial auto-accept. With partial auto-accept, if the recommendation exceeds the auto-accept parameters, the recommendation is accepted as far as the parameter permits. For example, if the auto-accept daily change limit is 4% and the price recommendation is 5%, using partial auto-accept will result in an increase of 4%. By enabling auto-accept, a landlord functionally delegates pricing authority to RealPage (within the bounds of the daily and weekly limits). 67. As part of the onboarding process, internal RealPage guidance states, “AUTO ACCEPT should be confirmed as `on' with parameters in place.” Internal AIRM training explained that RealPage wanted to “widen auto accept parameters” by introducing the feature and then “creating enough trust so that over time we have client[s] that are willing to let auto accept run with very wide parameters . . . AKA—accept all recommendations.” RealPage trains pricing advisors to have an “accountability conversation” or a “refresher on short term vs. long term goals” for clients that show less tolerance for increasing auto-accept parameters. 68. Even if a landlord does not want to use auto-accept, RealPage trains its advisors to convince the landlord to turn it on with 0% limits—a setting whereby auto-accept will never accept price changes. The reason? So that it is no longer a question of whether the client turns on auto-accept, but only a matter of convincing them to widen the parameters and further delegate pricing decisions. RealPage instructs its advisors on best practices: “[I]f a partner is not ready to use auto acceptance, are they ready to use revenue management?” 3. RealPage Pricing Advisors Provide a “Check and Balance” on Property Managers To Increase Acceptance of Recommendations 69. RealPage offers landlords pricing advisory services. Landlords typically have an assigned pricing advisor, unless the client has internal revenue managers that were certified by RealPage. Pricing advisors play an important role in the daily review of pricing recommendations. Landlords' property managers are asked to review recommendations every morning by 9:30 a.m. After their review, a pricing advisor accepts agreed-upon pricing within an hour and escalates any disputes to the landlord's regional manager. 70. If a property manager disagrees with the direction of a recommended price change— e.g., the manager wants to implement a price decrease when the model recommends a price increase—the RealPage pricing advisor escalates the dispute to the manager's superior. As a pricing advisor manager explained in a client training, the advisor would “stop the process and reach out to our partners”—the property manager's supervisors—to “talk about this further.” The advisors, the manager elaborated, are part of a system of “checks and balances.” The client confirmed the value of this system to stop property managers from acting on emotions, which could limit RealPage's influence on their pricing. 71. Beyond the daily interactions between pricing advisors and their own property managers, clients agree to make meaningful changes when they use RealPage's pricing advisory services. Under the specifications for this service, clients agree to use AIRM or YieldStar exclusively to give quotes to potential renters, further tying landlords' pricing decision