Compass attacks Zillow’s ‘weapons of choice’ in key hearing 

Editor's note: Real Estate News is following the preliminary injunction hearing in Compass v. Zillow this week. We're compiling highlights for our readers, starting with opening arguments — stay tuned for top takeaways from witness testimony and more.

Attorneys at a preliminary injunction hearing in New York this week presented forceful arguments — each hoping to sway the judge in Compass' lawsuit against Zillow.

The hearing, which began on Nov. 18 in the U.S. District Court for the Southern District of New York, will determine whether Zillow must lift its ban on certain Compass listings while the case plays out. 

How we got here

In April, Zillow rolled out new Listing Access Standards, effectively barring listings that are publicly promoted to consumers but not widely available via the MLS. The new standards appeared to be a response to the recent push toward private listings led by Compass and embraced by some other large brokerages. 

In response, Compass sued Zillow in June, claiming the home search portal was "abusing its monopoly power." Compass later asked the court for a preliminary injunction to prevent Zillow from enforcing its listing ban during the course of litigation.

Giant vs. giant

The hearing began with opening statements. Compass had the first opportunity to present its case, with attorney Kenneth Dintzer detailing Zillow's alleged antitrust violations and monopolistic practices — frequently using Zillow's own internal strategy documents and investor presentations to support those claims — and explaining how Zillow's actions have allegedly harmed Compass and consumers. 

A Goliath on the attack? Dintzer used battlefield metaphors, portraying Zillow as a dominant and aggressive player that implemented its Listing Access Standards "to squash the threat posed by Compass and by other brokerages that were following Compass' lead" in leaning into private listings. 

The portal's "weapons of choice" in this campaign, Dintzer said, were market strength — "they control the online search market" — and an alleged agreement with Redfin "to boycott Compass' listings and punish their search rival," a reference to his earlier statement that Compass competes alongside Zillow, Redfin and others in home search. "Fear, uncertainty and doubt were the tools of the boycott," he added.

'A monopolist flexing': Zillow is acting as an industry regulator, Dintzer claimed, stating: "What company thinks that it can issue standards for the industry in which it competes in? That, your Honor, is a monopolist flexing." He went on to say that Zillow "enlisted Redfin to join in its efforts," citing Redfin's pledge to follow Zillow's lead in barring certain private listings just four days after the new listing standards were announced. 

To support its claims of collusion, Compass has previously suggested Zillow's rental listings partnership with Redfin is what "gave rise to the conspiracy" at the heart of its lawsuit, alleging a "quid pro quo" arrangement during this week's hearing.

Dintzer did not make any references to eXp or NextHome — major brokerages that have also embraced Zillow's listing standards — when outlining the conspiracy argument.

'Irreparable harm': Zillow's listings ban, Dintzer argued, "has already had a huge effect on Compass." While not presenting specific numbers, he said there was a dropoff in unique visitors to Compass.com following Zillow's announcement — though he noted that "growth in the website will be very difficult, if not impossible, to measure." 

Dintzer also referenced an email from a Compass client "who did not want to use private exclusives" because she "is scared to be banned from Zillow," citing it as an example of harm to "both the reputation of Compass and of its three-phased marketing program." As for consumers, Ditzer said "lost competition harms all buyers and sellers," a message Compass CEO Robert Reffkin has been repeating for months. 

Zillow not required 'to promote its rivals' business'

While Compass portrayed itself as a victim of a restrictive policy, Zillow had an unsurprisingly different take: "This is a case about whether this Court can compel Zillow to promote its rivals' business on its own website," attorney Bonnie Lau asserted at the beginning of her opening statement, making the argument that Compass, not Zillow, is the one interfering with a competitor's business.

No hoarding, no boycotting: "While a monopolist might hoard listings, Zillow's standards encourage all brokerages to promptly share those listings with the MLS, and that shares them with thousands of different brokerage and online home search platforms," Lau stated. "Rather than boycott Compass, the standards apply equally to all brokerages, anyone who wants to list on Zillow, with two warnings before any listing is not shown."

Banned listings are still widely displayed elsewhere: In addressing Compass' portrayal of Zillow as an industry regulator, Lau said the listing standards only apply to what Zillow includes on its own website. "Compass remains free to differentiate itself with unique content, with exclusive listings; and eXp, Redfin, Realtor, Homes.com, thousands of these other websites continue to display today the Compass listings that are no longer displayed on Zillow. In fact, some of those companies even boost those listings."

Contradictory claims? Lau also argued that, in court, Compass said it sustained "serious lasting damage that cannot be undone or compensated," but when speaking to "its agents, to its sellers, to its board, and to its investors, it tells a very different story."

Compass, Lau said, has continued to promote its 3-phased marketing (3PM) strategy, encouraging agents to use it "even after it understood Zillow's position on private exclusives." And while Compass claims Zillow's listing standards have negatively impacted its 3PM strategy, "just last week in its public earnings call, Compass' CEO said 3PM had not reduced but increased agents' chances of getting listings," Lau noted. 

"Zillow's standards have had no impact whatsoever, much less foreclosed competition in the online home search market," Lau added.