Zillow sues Compass, MRED over ‘collusion’ to hide listings 

One legal battle between portal giant Zillow and brokerage behemoth Compass may be over, but another has just begun.

Allegations of collusion, threats

On Tuesday, Zillow filed a lawsuit against Compass and Chicago-based multiple listing service MRED over a partnership the two entities forged at the end of April. MRED announced that it was opening its services to brokerages nationwide — and Compass was helping jumpstart the initiative by providing the MLS with access to its full listing inventory. 

In doing so, Zillow is alleging that the companies "colluded" to conceal listings from potential home buyers and "conspired to punish Zillow for not going along with it," according to a blog post published by Zillow on Tuesday.

The company claims that after the partnership between Compass and MRED was announced, the MLS "demanded" that Zillow reinstate Compass listings the portal had previously banned for violating Zillow's listing access standards — even though the listings were for properties in Florida, Georgia and California, well outside the MLS's previous geographic territory. 

At the same time, Zillow alleged, the tech provider that distributes MRED's listing feed — MLS Grid — threatened to terminate Zillow's access to the feed if it did not reinstate Compass private listings on the portal. 

To avoid losing the listing feed, Zillow has not been enforcing its access standards in the greater Chicago market, the portal noted.

Zillow also pointed out that Rebecca Jensen, MRED's CEO, is board chairperson of MLS Grid.

Compass 'cut off the pipelines'

Compass has also continued "an escalating series of moves to squeeze Zillow," the portal alleged in its blog post, first by terminating Compass' and its affiliated brokerages' existing agreements to give Zillow direct listing feeds, and then as of May 8, terminating all direct listing feed agreements with Zillow nationwide on behalf of every Compass brokerage entity or subsidiary.

"This cut off the pipelines Zillow had been assembling as a potential alternative to MRED," Zillow's blog post stated.

Through the powerful partnership — MRED has roughly 43,000 members across a key market, and Compass International Holdings is the largest brokerage entity in the country — Zillow is alleging that the two companies are wielding MRED's monopoly over the Chicago market to harm competitors like Zillow from accessing the market in a "group boycott," which violates the Sherman Antitrust Act.

"Using that monopoly power to coerce Zillow — and to shield Compass' private listing business from competition — is precisely the kind of conduct the antitrust law was designed to prevent," Zillow's blog post states.

Notably, when Compass sued Zillow last June, the brokerage made similar allegations against Zillow, accusing the search portal of "abusing its monopoly power."

Harm to consumers and agents alike

Zillow's complaint also alleges that the move by Compass and MRED harms consumers in Chicago who prefer to use Zillow by effectively "blocking them" from using their preferred platform. Likewise, agents who prefer the platform will end up being blocked from Zillow as well.

By generally advancing the agenda of "insidious" private listing networks, Zillow's complaint states, MRED and Compass are also harming consumers by creating barriers to information and "exacerbating the accessibility and affordability crisis, and reducing the pool of buyers and listings that makes the real estate market efficient and competitive."

The portal also warned that the threat is quickly spreading, particularly with Tennessee-based Realtracs and California-based The MLS/CLAW announcing similar partnerships with Compass in recent weeks.

Zillow is seeking multiple injunctions: The portal wants the court to prohibit MRED and Compass from taking any additional actions to promote their alleged conspiracy; prohibit the enforcement of MRED's newly revised IDX display and exclusion of listings rules (which now specify that member participants may not exclude listings based on identity of a participant, brokerage firm, licensee or representative); and prohibit MRED from terminating Zillow's access to its IDX or VOW feeds based on enforcement of its access standards.

Compass: Zillow is 'punishing' agents

A spokesperson for Compass International Holdings said that Zillow's actions were "punishing" agents who are simply following their clients instructions for the marketing of their homes.

"Compass believes homeowners should have the right to decide how to market their homes," the spokesperson said in an email. "The industry is evolving to give consumers more choice and we support that progress. We remain committed to advocating for homeowner choice and an open, competitive marketplace."

Representatives for MRED did not immediately respond to requests for comment.

Zillow: Compass trying to 'tilt the field' for its own gain

Zillow Chief Industry Development Officer Errol Samuelson said during a call that "the real story here is about what is best for consumers."

Samuelson noted that the advantage of the U.S. real estate market is the way it creates open access through the MLS, which allows for broad exposure among all players in the market on equal terms — but some powerful entities are threatening that smooth-running system, he argued.

"MRED, who runs a monopoly in the greater Chicago area, they are the only source for 95% of listings," Samuelson said. "And they decided to take their largest brokerage, Compass, who actually happens to be the largest brokerage in the country, [now] you've got this big, large monopoly on listings and you've got this massive market share brokerage and they decide to start making rule changes to tilt the field in favor of Compass at the expense of other brokerages in the market and at the expense of consumers."

When asked about Compass' move to drop its previous lawsuit against the portal over its listing access standards, Samuelson said it was clear that the suit had only been Compass' "plan A," while its "plan B" — to reshape the market with MLSs — was already in progress. "They were already testing this other idea that, 'Well if we can't beat them in the court, maybe we can get these local MLS monopolies to change their rules and do our bidding for us.' And that's exactly what's happening right now."

"Is it great for Zillow?" Samuelson continued. "No. But you know who it's really not good for? It's not good for consumers."