The complaint also says that Compass ended its direct listing feed to Zillow for all brokerages and affiliates nationwide on Friday.
Compass International Holdings and the multiple listing service serving the nation’s third-largest real estate market illegally conspired to threaten to cut off Zillow’s access to listings in the region, harming consumers in the process, Zillow wrote in a new antitrust lawsuit filed on Tuesday.
The lawsuit, filed in U.S. District Court in Northern Illinois, takes aim at Compass’ pre-marketed listings strategy, as well as its partnership with MRED to distribute Compass’ listings.
The lawsuit is the latest signal that the real estate industry remains engulfed in a debate that could determine how, when and where listings are marketed moving forward, with potential impacts on portals’ access to listings in markets across the country.
“This action seeks to restore competition and transparency in residential real estate,” Zillow wrote.
“In recent years, some powerful players in the real estate industry, such as MRED — Chicagoland’s monopolist multiple listing service (“MLS”), and Compass, the country’s largest real estate brokerage, have erected barriers to information that harm or threaten harm to sellers, buyers, and competitors by hiding real estate listings behind a velvet rope in a Private Listing Network (‘PLN’),” Zillow wrote in its complaint.
The lawsuit provided new details that show that Zillow faces the threat of losing access to a growing share of real estate listings, which the company has previously deemed “the lifeblood” of its business.
The lawsuit is a continuation of Zillow’s effort to prevent the spread of what it called “insidious private listings,” which it says are harmful to consumers. But it also makes clear that the portal faces a growing threat over its access to the listings that fuel its sources of revenue.
In the complaint, Zillow acknowledged that the partnership between MRED and Compass made it impossible to enforce its Listing Access Standards in Chicagoland over the threat of losing access to all MRED listings.
Late last month, MRED announced that it was expanding nationwide, and Compass said that it would subsidize the cost to join for up to 100,000 of its agents. A week later, Realtracs, the MLS serving the Nashville area, followed suit, also in partnership with Compass.
Zillow also wrote that on May 8, Compass terminated all of its direct listing feeds with Zillow; however, the company maintains direct feeds with the MLSs directly, and no listings are missing from the portal.
“Compass has thus terminated Zillow’s direct feed access to more than 25 [percent] of the current listings in Chicagoland, and ratcheted up its conduct from Chicagoland to nationally.”
But that could change.
Zillow wrote that on May 5, MRED threatened to cut off Zillow’s listing feed from the MLS after Zillow suppressed Compass listings in Florida, Georgia and California.
When Realtracs expanded nationwide, it too changed its rules to require Zillow to display listings that violate its private listings policy or lose access to the feed.
“In effect, the rule change requires Zillow to display, notwithstanding its Standards, all Compass listings or risk termination of all Realtracs feeds across all brokerages,” Zillow wrote. “In other words, Realtracs (like MRED) had agreed to use its control over other brokerages’ listings to protect Compass’s PLN.”
Last week, an MLS serving Los Angeles known as TheMLS/Claw made similar changes that Zillow said mirrored those made by MRED and Realtracs and supported by Compass.
In its lawsuit, Zillow alleged that MRED and Compass have enacted a per se unlawful boycott of the portal and that MRED is enforcing a monopoly.
MRED didn’t immediately respond to a request for comment.
In a statement, a Compass spokesperson said that Zillow was “punishing agents” for following their clients’ wishes.
“Compass believes homeowners should have the right to decide how to market their homes,” the spokesperson said. “The industry is evolving to give consumers more choice, and we support that progress.”
This is a breaking news story that will be updated.