Real estate brokerage Compass is suing Zillow, claiming it is violating antitrust laws with a new rule banning home listings from its platform if they appear on any other service for more than 24 hours before being on Zillow.
The new rule was announced by Zillow in April and took effect on 28 May. The real estate giant said the new standard is necessary to ensure listings are marketed to every buyer and give house hunters "fair access to listings without having to get access behind a velvet rope controlled by any one company”.
In retaliation, Compass has taken Zillow to court, heating up the rivalry between the home search engines over control of home listings.
Compass aims to give users a competitive advantage through posting listings before they appear on Zillow and other sites. The company claims Zillow is leveraging its market dominance to impose the block on listing outside of its website.
Compass CEO Robert Reffkin said the lawsuit was “about protecting consumer choice”.
"No one company should have the power to ban agents or listings simply because they don't follow that company's business model,” he said in a statement.
"That's not competition. It's coercion. Imagine if Amazon banned a seller for offering a product on their own website first. That's what Zillow is doing in real estate. Consumers should have the right to choose how they sell their homes."
In an email to CBS MoneyWatch, a Zillow spokesperson called Compass’ claims unfounded and said the company would fight the lawsuit.
"At the heart of this issue is a simple principle: When a listing is publicly marketed, it should be accessible to all buyers across all platforms, including Zillow,” the Zillow spokesperson said.
“Hiding listings creates a fragmented market, limits consumer choice and creates barriers to homeownership, which is bad for buyers, sellers and the industry at large, especially in this inventory and affordability-constrained environment."
Zillow also said it was working in the interest of consumers and that Compass is trying to hoard listings. Compass claims that Zillow adds costs to the home-buying process.
If Compass’ lawsuit succeeds, it could transform how real estate listings are shared online.
According to a February investor presentation from Zillow, 80% of home searchers go directly to Zillow when looking for a new home.
Compass has also accused Zillow of conspiring with others in the real estate industry, including Redfin and eXp Realty, who both agreed to adopt Zillow’s new rules once they were announced.
In a statement, eXp Realty said “any implication of co-conspiracy is categorically false” and that its business strategies are developed independently.
“It’s ironic that Compass, a company that’s never turned a profit, is choosing to burn cash and credibility on a lawsuit. And suing Zillow for giving consumers access? That’s not strategy, that’s desperation,” said Leo Pareja, the CEO of eXp Realty.
