Compass v. Zillow hearing: Who made the stronger case? 

Editor's note: Real Estate News is following the preliminary injunction hearing in Compass v. Zillow. Read our top takeaways from closing arguments and more.

After listening to four days of arguments and testimony in a preliminary injunction hearing last week, it's now up to a judge to determine the fate of Zillow's private listing ban.

Catching up on the Compass vs. Zillow case? Here are the top takeaways from the closing statements on Nov. 21.

How we got here

Zillow, a staunch advocate for listings transparency and universal access, announced new Listing Access Standards in April affecting certain private listings. The policy, which Zillow began enforcing in June, bars listings that have been made public but are not widely available via the MLS and IDX feeds.

In response, Compass — which has leaned into private listings via its 3-phased marketing (3PM) strategy — sued the search portal, alleging antitrust violations and conspiracy, among other claims. Listings that go through the 3PM process are not allowed on Zillow per its new policy, and Compass asked the court for a preliminary injunction to prevent Zillow from enforcing its standards while the case plays out.

What Zillow's attorney had to say

Eric Tuttle presented closing arguments for Zillow. He focused on the need for an open marketplace, how an injunction would impact Zillow, and Compass' lack of evidence to support its claims of "irreparable harm" or antitrust violations.

A private listings domino effect: "When one brokerage is holding back their inventory and freeriding on the open market created by everyone and marketing that as an advantage, that puts pressure on everyone else. No one wants to be the sucker providing liquidity as a back-up for someone else."

Then what would happen? "At minimum, it's a fragmented market with fewer resources and incentives focused on creating the best experience for the consumers in this market of home search, and it's potentially much worse."

Forcing Zillow to take listings: "Compass is saying that in order to compete with Zillow, Compass needs the ability to send its stale listings to Zillow wherever it's done using them exclusively, and Zillow has to take them. … That's what Compass is asking for with this injunction: An order that Zillow must subsidize Compass' purported strategy to compete in home search."

On irreparable harm: "If you are going to go out of business, that's irreparable harm. … Compass is having the best quarterly results of its existence, and is doing quite well."

"Three-phased marketing is still being done and is still doable by Compass. … [Compass] has made the point that Zillow is not necessary to sell homes. … We also know that Compass has projected growth in its three-phased marketing program even in the face of Zillow's listing access standards."

On conspiring with Redfin: "There's simply no evidence of an agreement between Zillow and Redfin about what listings will be displayed on their sites, let alone a conspiracy between them to boycott Compass."

"When Redfin announced its standard, it didn't just say, we're doing what Zillow's doing. … Redfin was directly trying to take a middle ground between Compass's position and Zillow's position in the policy it announced. Again, these are competitive responses that you would expect in a market where there has been no harm to competition."

On market control and competition: "Market power means the ability to raise prices or reduce output in that market, and there's no showing of that even if Zillow has a large audience."

"It's not enough for Compass to show that it's harder for it to compete in home search. It has to show that what's going on is actually making things worse for competition as a whole in home search. … There was no evidence presented in this case that there was any marketwide harm to competition in home search … no evidence that the quality of home search experiences provided to consumers or the output of home search was in any way reduced; no evidence of increased prices — all of the hallmarks of anticompetitive conduct."

What Compass' attorneys had to say 

Two lawyers offered closing arguments for Compass: Chahira Solh and Kenneth Dintzer. They led with the theme of choice versus control — one of CEO Robert Reffkin's repeated talking points — arguing that Zillow wants to dictate how both home sellers and Compass can market properties. 

The judge in the case, Jeannette A. Vargas, pushed back on that argument several times, suggesting that Compass could continue to use 3PM and share listings with other portals. She also noted that even if Zillow's listing standards have soured some sellers on 3PM, they can still make the choice to premarket their home with Compass or list it without premarketing.

The attorneys also detailed why Zillow's actions and statements demonstrate collusion and anticompetitive behavior.

An arsenal of weapons: "To preserve its monopoly, Zillow is using collusion, industry-changing rules, standards, threats, financial penalties, and bans to eliminate differentiated marketing strategies."

Controlling the industry: "What Zillow is really trying to do is control the entire real estate industry to really make sure that the market only works the way that Zillow wants it to work and the way that Zillow is accustomed to the market working. So to do so, Zillow is not just dictating how home sellers market on Zillow, but it is instead dictating how home sellers market properties outside of Zillow."

Conspiring with Redfin: Dintzer reviewed a series of communications between Zillow CEO Jeremy Wacksman and Redfin CEO Glenn Kelman as evidence of a conspiracy, similar to his line of questioning during Wacksman's testimony. Before he began, he stated, "The agreement doesn't need to be in writing. It doesn't need to be express. All we need is a conscious commitment to a common scheme."

"We have the April 9 call between Mr. Wacksman and Mr. Kelman. The testimony is that Mr. Kelman was not aware of this coming up. Although he had asked for more aggressive tactics, he was not aware of this coming up. Again, a text. No explanation why they are having the call. Nobody on the call. No lawyers. No notes and no witnesses. What we know is they talked about the listing standards. Mr. Kelman responded that he was thrilled. This is all on the same phone call and that he said he would likely do the same — a commitment to a common scheme."

Judge Vargas questioned the conspiracy claim, asking, "Why is this just not common actions taken by competitors in response to a common stimuli? Where is the agreement or even, as you say, the parallelism?"

How Compass is harmed: "Three-phased marketing isn't just a way to grow three-phased marketing, but it's many different aspects of Compass's business. … Inventory is one of those. Compass.com is one of those. They all kind of work together and help Compass continue to grow. And even now with the Zillow ban in place, the largest brokerage in the country isn't really able to compete in online search because we're not allowed to have anything that is differentiated … because it could result in a ban from Zillow."