U.S. District Judge Jeannette Vargas of the Southern District of New York has denied Compass’s request for a preliminary injunction against Zillow’s new listing rules (what it calls “Listing Access Standards”), allowing the portal’s new rules to remain in effect while the broader antitrust lawsuit plays out.
The decision delivers a significant legal setback for Compass, which had argued that Zillow’s standards amount to anticompetitive conduct that threatens its business model and harms consumer choice.
In a 50-page filing issued late Friday morning, Vargas concluded that Compass failed to demonstrate a likelihood of success on the merits to justify emergency relief.
“Since Compass seeks a mandatory injunction, Compass must establish a clear showing of success on the merits,” she wrote. “On the current evidentiary record, Compass fails to satisfy even the lesser…standard.”
Compass CEO Robert Reffkin tells RISMedia that this decision “is not a loss, and our lawsuit continues forward.”
“In Zillow’s internal strategy document, Zillow said Zillow will ‘punish the agent for choosing to put their listings on alternative networks,’” he continues. “With agents being our clients, we have an obligation to protect our agents from Zillow, which explicitly stated they are trying to ‘punish the agent.’”
In a statement, Zillow called the lawsuit “baseless” and the ruling “a clear victory not just for Zillow, but for consumers, agents, brokerages and the real estate industry at large.”
“Zillow believes everyone deserves equal access to the same real estate information at the same time. Compass does the opposite — hiding listings away in its private vault, harming consumers and small businesses to benefit itself,” a Zillow spokesperson told RISMedia.
The ruling—and the lawsuit—are only a small part of a nationwide multi-front battle between the two real estate behemoths, with Compass recently closing its acquisition of Anywhere to consolidate tremendous market power, and Zillow continuing to grow its considerable influence with both consumers and real estate professionals.
Compass sued Zillow last year, alleging violations of the Sherman Act after Zillow announced that it would no longer display listings that are publicly marketed outside the MLS for more than one business day. The policy directly impacts Compass’s 3-Phased Marketing strategy, which allows listings to be marketed privately or as “Coming Soon” before appearing on the MLS.
Back in November, Vargas presided over a four-day “evidentiary hearing”—essentially a mini-trial—that saw Compass CEO Robert Reffkin, Zillow CEO Jeremy Wacksman and numerous other top executives take the stand to defend their respective positions.
Vargas acknowledged that Zillow’s rules have had a measurable impact on Compass’s business, including a decline in agent and seller participation in the brokerage’s phased marketing program. However, the court found that those harms did not stem from conduct likely to violate antitrust law.
“Each party retained discretion to determine and manage the content of their own platforms,” Vargas wrote.
Compass has argued that without a court order, Zillow’s rules would cause “irreparable harm” to its business model, further claiming that the portal used its significant market power to bully or cajole other industry participants (specifically Redfin) into falling in line.
Vargas found this unconvincing, writing that she did not even have to consider the “irreparable harm” aspect of the case—which took up a large portion of the November hearing—because Compass failed to show it could likely prevail in the litigation.
Compass had also highlighted communications between Zillow and Redfin leadership as evidence of an anticompetitive conspiracy, but Vargas rejected those claims, finding insufficient evidence of a horizontal agreement between Zillow and competitors.
While Redfin announced a similar policy shortly after Zillow’s LAS, the judge said Compass fell far short of demonstrating any sort of conspiracy.
“Compass has failed to show a likelihood that Zillow entered into an anticompetitive contract, agreement, or conspiracy with Redfin,” she wrote. “Compass has not presented any direct evidence of an anticompetitive agreement between Zillow and Redfin. Further, the circumstantial evidence upon which Compass relies is not only ambiguous at best, but is also contradicted by credible witness testimony and the contemporaneous written record.”
Vargas also found that argument that Zillow had monopoly power significant enough to “exclude competition” in the home search market, as Compass claimed, not convincing when considered “holistically,” noting that no brokerage actually stopped offering private listings after the Zillow rules were announced (though internal Zillow documents showed that the company explicitly sought to prevent more brokerages from offering these kinds of programs).
She also called much of Compass’s research and data designed to show Zillow’s market share “flawed,” and noted that many consumers use Zillow along with other portals and websites during their home search.
“(E)ven assuming that Zillow possesses a 50%-66% share of the relevant market, Compass has not provided sufficient evidence from which it can be inferred that Zillow has monopoly power in the online home search market,” Vargas said.
The Zillow spokesperson sought to frame the ruling and the lawsuit around the current status of real estate, and how consumers are allegedly affected.
“At a time when Americans are struggling to afford a home amid a major housing shortage, hiding listings in private networks only deepens the crisis. While Compass keeps consumers in the dark, Zillow turns on the lights to help people get home,” the spokesperson said.
During closing arguments during the hearing back in November, Vargas commented that Zillow is not stopping Compass from doing its 3-PM Strategy.
“Compass is still doing three-phase marketing and can continue to do three-phase marketing, and Zillow can’t tell you not to do that. They are just going to say, ‘We don’t want your product after,’” Vargas said. “So you go ahead and do it. You put it on your website. You can put it on Homes.com. You can put it on Realtor.com. You’re just not putting it on Zillow.”
