Ahead of the Nov. 18 hearing over its legal challenge to Zillow’s new listing rules, Compass filed a supplemental brief against the portal, accusing it of weaponizing its dominance in the home portal market to crush competition and force home sellers and agents to list properties on its platform first.
In the pre-hearing brief submitted to the federal court in New York, Compass alleges that Zillow implemented an anticompetitive “Zillow Ban” that punishes agents who allow homeowners to publicly market their listings with competing websites or brokerages, before listing on Zillow.
The filing claims to provide evidence that Zillow achieved compliance through intimidation, with Zillow data showing that 90% of agents who received a Listing Access Standards notice abandoned off-Zillow marketing strategies entirely.
“Zillow’s recent announcement shows that it has the power to intimidate agents into depriving home sellers of options they want,” the filing reads. “And agents should be terrified: if a home seller wants to publicly market her property outside of Zillow and later put that listing on Zillow, the home seller must fire both her agent and her agent’s brokerage company, terminate the listing agreement and hire a new agent and brokerage. In that situation, the agent would have done significant work and paid upfront marketing expenses, but be paid nothing.”
The upcoming hearing is a high-stakes early test in the potentially landmark case, as Judge Jeannette Vargas will decide whether to temporarily block Zillow from implementing its new rules while the lawsuit plays out. Both companies have enlisted expert witnesses and testimony, with the hearing scheduled for multiple days.
Previously, Zillow has contested Compass’s allegations, arguing that its listing standards are not anticompetitive, but rather pro-consumer policies intended to ensure transparency and broad access to listings.
Compass further claimed that Zillow and the MLS have a “mutual monopolistic backscratching” relationship in order to effectively block competition.
“In Zillow and the MLSs, you have one monopoly protecting another monopoly,” Compass argues in the filing. “In protecting the MLS, Zillow is protecting its free listing supply chain.”
Separately but almost simultaneously, the judge overseeing the case ruled that Compass could have an agent testify at the hearing.
The brokerage argued that this arrangement has a long history. Until this year, the National Association of Realtors®’ (NAR) Clear Cooperation Policy (CCP) “protected Zillow from having to fight for listings to power its home search website because it required that any listing that is publicly marketed must be submitted to an MLS within one day—meaning Zillow could almost immediately access listings through the MLSs for real-time display on its own site.”
Compass builds on previous efforts to allege a conspiracy between Zillow and, nonparty to the case, Redfin. Zillow and Redfin’s CEOs engaged in communications ahead of the announcement, and the companies announced nearly identical bans within two business days of each other (both have denied Compass’s claims that they “conspired” on the rules).
The new Zillow rules, Compass argues in the filing, are anticompetitive since they control what competitors and consumers do outside of Zillow.
“Zillow does not have carte blanche to adopt industry-changing rules and act like an industry regulator under the guise of ‘refusal to deal’ doctrine,” the filing reads. “Like the conduct of other tech companies that have recently made and lost that argument, the anticompetitive nature of the Zillow Ban is that it controls what competitors and consumers do outside of Zillow.”
