KoStar filed a court brief in support of Compass and MRED MLS, saying the portal’s pre-marketing program softens the company’s criticisms of private listing networks.
CoStar Group has offered its two cents in damages in Zillow’s antitrust lawsuit against Compass International Holdings and MRED MLS. In the lawsuit, the portal alleges that brokers and MLSs illegally conspired to threaten to cut off Zillow’s access to properties in the area, harming buyers and sellers in the process.
CoStar filed a 198-page court brief on Wednesday opposing Zillow’s preliminary injunction barring MRED MLS from again cutting off access to the portal’s listing feed. A federal judge already issued a temporary restraining order on May 22, ordering MRED to restore the feed.
Court briefs allow individuals or organizations with a strong and relevant interest in the litigation to provide “additional relevant information or arguments” that may be helpful to the court, without becoming a plaintiff or defendant. The court accepted CoStar’s amicus brief because CoStar is a competitor of Zillow and has knowledge of “the structure, competitive dynamics, and economics of the residential real estate market.”
The overview of real estate information, analytics and online marketplaces is centered around Zillow Preview, a two-month-old program created by the portal to help agents and their sellers “pre-market” properties. Zillow Preview listings receive “priority listing” in homebuyer search results and saved home alerts, and feature broker branding. Listing agents also have access to real-time property information and the opportunity to be the first point of contact for homebuyers requesting additional information.
Although Zillow emphasizes that Preview operates within MLS guidelines and meets the portal’s listing access standards, Koster said the program’s existence invalidates Zillow’s claims against Compass and MRED. In April, MRED announced a partnership to distribute exclusive Compass merchandise and upcoming listings to MRED’s private listing network PLN participants.
Andy Florence, CoStar Group CEO
“Unfettered by consistency constraints, Zillow boldly (and hypocritically) alleges in this lawsuit that the brokerage firm ‘blocks off listings in its large network from outside competitors and prevents competitors from displaying those listings publicly’ and ‘uses its large network to lure buyers and sellers, resulting in so-called network effects,'” the briefing said. “However, the actions Zillow has vociferously condemned accurately represent Zillow’s own actions and objectives with respect to Zillow Preview. Through exclusive deals, Zillow has cut off pre-market listings from competitors like Homes.com, and is seeking to leverage its extensive network, including listings not available on competing platforms, to lure customers.”
CoStar’s court brief alleges that Zillow Preview is anticompetitive for three main reasons:
Zillow Preview includes more than 60 brokerage and franchise partners, the largest of which are Keller Williams, REMAX, HomeServices of America, United Real Estate, and Side. These pre-marketing agreements are proprietary and Homes.com and other competitors do not have access to these listings. Zillow and Realtor.com have entered into an agreement to display Zillow Preview properties on Realtor.com starting this summer. CoStar likened the deal to Zillow’s deal with Redfin, which was challenged by the FTC, and said it prevents Realtor.com from competing with its pre-marketing services. Zillow Preview is part of a larger anti-competitive corporate strategy that includes Zillow Premier Agent and Zillow Home Loans, and Zillow is facing multiple class action lawsuits over them.
Finally, CoStar argued that the preliminary injunction should be denied because Zillow could relieve its claims of irreparable harm by lifting the listing ban and maintaining access to MRED’s direct listing feed.
“The crux of the argument regarding Zillow’s irreparable harm stems from the prospect of losing MRED’s listing and Zillow’s ‘platform.’ [to] “The outcome is entirely within Zillow’s control. As the Complaint and Complaint acknowledge, Zillow is not at risk of losing MRED’s listing unless it prohibits Defendants from pre-MLS listings. If it upholds the principles of transparency that Zillow espouses and does not prohibit certain listings, Zillow will maintain MRED’s listing and will not suffer any harm.”
Zillow and Compass both commented on this brief, with Zillow criticizing CoStar for blurring the line between premarketing and private marketing.
“Zillow Preview is pre-marketing and publicly available for anyone to view, save, and connect directly to listing agents. Buyers do not need to work with a specific broker to access it,” a Zillow spokesperson told HousingWire. “Compass Private Exclusives are paid private marketing. These listings are hidden from buyers unless they work with a Compass agent.”
“The express purpose is to route listings through Compass’ proprietary network prior to, or instead of, making them available to the public,” they added. “Calling them the same thing is a play on words designed to blur clear distinctions, and if it’s not discussed, it’s exactly the kind of confusion that harms buyers and sellers.”
Compass, on the other hand, echoed Koster’s argument, saying Zillow is inhibiting “seller choice.”
“It’s hard to take Zillow’s transparency claims seriously when Zillow is banning listings simply because a seller has chosen a different marketing strategy,” a spokesperson told Inman. “Transparency means providing consumers with accurate information and clear disclosure about who is providing that information and whether they have a financial relationship with the portal.”
“This does not mean forcing all homeowners to sell their properties according to the revenue model recommended by Zillow,” they added. “Homeowners have the freedom to choose the marketing strategy that best suits their interests, and we will continue to uphold that principle.”
A preliminary injunction hearing will be held in July.
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