CoStar targets Zillow Preview in amicus filing over MRED feed

CoStar Group is looking to insert itself into Zillow’s ongoing antitrust battle with Midwest Real Estate Data (MRED) and Compass International Holdings. 

On Wednesday, the parent company of residential real estate listing portal Homes.com, filed an amicus brief in opposition to Zillow’s motion for a preliminary injunction seeking to prevent MRED from suspending its listing feed. A hearing on this motion is scheduled for early July. 

“Zillow’s Motion paints Zillow as a fledgling, pro-transparency actor victimized by the powerful Defendants because Zillow courageously spoke out against them,” the filing states. “That narrative could not be further from the truth. Zillow’s Motion is just another tool for Zillow to kneecap competition in an apparent effort to replace the current MLS regime.”

In the filing, CoStar claims that Zillow’s motion is part of its “scheme to expand its ecosystem and replace the non-profit MLS system.” 

“It seeks to fragment the market in its favor, locking out rivals like Homes.com, while barring others’ pre-market listings and maintaining broad access to MLS feeds, until it no longer needs them,” the brief states.

According to CoStar, Zillow believes that it has grown so large that a listing on Zillow’s network alone is, by definition, pro-consumer. Thus, Zillow need not share it further. And a listing not available to Zillow’s network is, by definition, anti-consumer. Zillow needs a reality check.”

CoStar claims in the brief that Homes.com has been “directly harmed” by Zillow’s exclusive pre-market listing practices. 

In mid-March, Zillow launched Zillow Preview, a new offering providing agents and their sellers with the option to publicly pre-market their listings before the properties transition to an active listing status. Zillow launched the product in partnership with Keller Williams, REMAX, HomeServices of America, United Real Estate and Side but it has since expanded the offering to include dozens of other brokerages and franchisors. 

According to Zillow, listings may only be in a preview status for as long as local MLS rules allow and agents are responsible for understanding and complying with their local MLS rules regarding pre-marketing and statuses like ‘coming soon.’ 

“Hypocritical”

In the brief, CoStar calls the product “hypocritical,” claiming that Zillow Preview is the same thing as the defendants’ private listing networks, stating in the filing that the losing portal “trumpeted the very thing it had said was anathema when offered by a rival.”

According to CoStar, Zillow “audaciously complains about brokerages (1) ‘walling off the listings in their large networks from outside competitors,’ and (2) ‘using their large networks to lure buyers and sellers, capturing so-called network effects.’ But the practices that Zillow vociferously condemns describe precisely Zillow’s own behavior and objectives with respect to Zillow Preview.”

The Andy Florance-helmed firm goes on to claim that not only does it feel Zillow Preview anticompetitive but it is also anti-consumer. 

“Zillow uses sellers’ listings as bait to divert consumer leads toward Zillow’s affiliated buy-side brokers, so that Zillow can obtain a cut of the buy-side commission,” the filing states. “Zillow dupes consumers by presenting a ‘Contact Agent’ and ‘Request a Tour’ button beside property listings . . . And the vast majority of consumers do not understand this deception, evidenced by a recent study that found 99.7% of respondents incorrectly identified whom they were contacting on the Zillow platform.”

Zillow has previously stated that on Preview listings, consumers will be able to contact the listing agent directly via the “Contact Agent” button or schedule a tour of the property after the listing becomes active with the help of a Zillow Preferred buyer’s agent through the “Schedule a Tour” button. Additionally, Zillow has said that agents with Zillow Preview listings will not be charged for any leads they obtain through the contact agent button on their own listings when they are in the preview status.

In CoStar’s view, Zillow wants things “both ways.”

“On one hand, Zillow wants immediate access to brokerages’ MLS listings so it can profit from those listings as a brokerage competitor and an MLS replacement,” the filing states. “On the other, Zillow wants to hoard pre-market listings and market them exclusively through Zillow’s own channels, to the detriment of competition and consumers.”

Zillow’s agreement with Realtor.com

The filing, which also claims that Zillow is a “monopolist,” examines Zillow’s agreement with Realtor.com to syndicate Zillow Preview listings on the site. CoStar argues that the agreement allows Zillow “to lock up high-value ‘coming soon’ listings provided by brokerages, while its exclusive horizontal partnership with Realtor.com allows Zillow to capture a dominant marketplace share through elimination of a major competitor and exclusion of all others.”

“Zillow wants a court order forcing MLSs to hand over their listings while Zillow hoards its own exclusive pre-market inventory — a breathtaking ‘heads I win, tails you lose’ proposition,” Gene Boxer, CoStar’s general counsel, said in a statement. “The Court should see this motion for what it is: an attempt to weaponize the judicial system to  entrench Zillow’s dominance at the expense of competition, consumers, and the MLS system  that has served the industry for decades.” 

According to Boxer, CoStar filed the brief “because the Court deserves the full picture, and the full picture reveals that Zillow’s claims of concern for consumers and competition are a smokescreen for its own anticompetitive ambitions.”

Zillow did not immediately return HousingWire’s request for comment. 

CoStar and Zillow are currently locked in a legal battle of their own over alleged copyright infringement related to photos of rental listings. In an amended complaint filed in March, CoStar claimed  that Zillow has infringed on CoStar’s copyright on more than 53,000 watermarked photos across Zillow and the platforms it syndicates rental listings to, including Redfin and Realtor.com.