Real estate behemoth Zillow is suing three regional MLSs over an alleged effort to steer their members away from using the company’s ShowingTime software and toward a competing product owned by the MLSs, which the company claims violated federal antitrust statutes.
Filed at the end of December in the U.S. Federal District Court for Arizona, Zillow’s complaint names two Arizona-based companies and one Wisconsin-based company, which Zillow claims worked together with “expressly anticompetitive” aims and practices to undermine Zillow’s showing service in favor of their own, eventually deintegrating the platform on December 27.
“Defendants are seeking to gain monopoly power in the relevant geographic markets for showing management platforms,” the complaint reads. “There is a dangerous probability that they will succeed because MLS Defendants’ monopoly power over the MLS Services and their control over the member portals through which those services are accessed gives them the ability to degrade competing offerings and steer customers.”
While the lawsuit amounts to a relatively narrow dispute over software and business practices, the implication is that many or most MLSs could easily engage in the same behavior. Zillow’s arguments also mirror many of the same allegations put forward by plaintiffs in various class action suits filed over the last few years.
Citing a 2007 FTC report (which was also referenced by plaintiffs in several of the class action suits), Zillow argued that MLS access is effectively necessary to operate as a real estate agent.
“Each MLS has a monopoly over MLS Services, and controls the MLS member portal used to access those services, in its coverage area,” the lawsuit states.
While class action lawsuits have leveraged this argument to claim that consumers are harmed, Zillow applies roughly the same logic to third-party vendors, claiming there is no “reasonable substitute” for the MLS and that MLSs can use their market power to essentially kill or elevate products like showing services.
“The practical effect of a showing management platform not being integrated into the MLS member portal is that the platform is functionally unworkable for most agents,” the lawsuit claims.
In response to an emailed inquiry from RISMedia, a Zillow spokesperson referred to an open letter penned by Zillow Chief Industry Development Officer Errol Samuelson, which argued Zillow’s actions are about agent choice, and noting that other MLSs offer multiple options for showing services.
The MLSs, which include Metro MLS based in Milwaukee, Wisconsin, and Arizona Regional MLS based in Phoenix, Arizona, could not immediately be reached for comment.
In the lawsuit, Zillow claimed the behavior by the MLSs went further than aggressive competition. When, after the MLSs chose to sunset the ShowingTime service, Zillow offered to provide some of the product for free, the MLSs declined.
“There is no rational economic reason to reject the provision of valuable services at no cost, except for the existence of a conspiracy,” Zillow wrote.
But the filing also cites a representative of one of the MLSs, who allegedly said in a training that the choice to switch platforms was because Zillow is a “competing brokerage” and it “didn’t really sit well” to continue using ShowingTime.
