Compass‘s preliminary injunction hearing in his antitrust case against Zillow continued all week before ending on Friday. The hearing, which will be held in New York City under the auspices of U.S. District Court Judge Jeanette Vargas, will be used to decide Compass’ motion to block enforcement of Zillow’s listing access standards policy.
The policy, which went into effect June 30, prohibits listings from the site that have been publicly marketed more than one business day before the listing is available for display on Zillow. Compass filed a lawsuit against Zillow in mid-June, just before the enforcement deadline, claiming the policy stifles competition and causes irreparable harm to Compass.
Errol Samuelson back in the stands
After kicking off on Tuesday, the hearing continued on Wednesday, with testimony from Errol Samuelson, Zillow’s Chief Industry Development Officer; Zillow CEO Jeremy Wacksman; Jeremy Hofmann, senior vice president of market and audience at Zillow; and Elizabeth Ashton Alexander, Compass’ senior vice president of strategy and operations.
Samuelson was the first witness on the stand Wednesday. During his testimony, he explained why Zillow created its policy, as well as the impact of private listing networks. Samuelson says the growing number of private listing networks would undermine accuracy, timeliness and consumer trust and that Zillow created its policy because of the need for consistent rules to prevent widespread missing listings and erosion of consumer trust.
While on the stand, Samuelson was asked about a piece of evidence showing that Compass had the highest number of alleged listing violations (700) of any broker. In total, the document shows that 679 Compass agents violated the policy, compared to just 13 agents at the time Howard Hanna Real Estate Services, which had the second highest number of officers with violations.
Conspiracy theories
The next to take the stand was Wacksman, the CEO of Zillow, and he testified about Zillow’s relationship with Redfin and denied all allegations of a conspiracy.
Since filing the lawsuit, Compass claims it has uncovered evidence that Zillow and Redfin conspired to allow Zillow to maintain its alleged monopoly on housing advertising space. In his testimony, Wacksman denied these allegations.
Additionally, Wacksman answered questions about who Zillow discussed the policy with before announcing it in early April. According to Wacksman, Zillow “pre-notified dozens of people,” speaking personally with leaders of Redfin, Realtor.com And Everywhere. He noted that before speaking with Redfin CEO Glenn Kelman, he had not discussed the idea for the policy with Redfin leaders, and that Kelman said nothing during his briefing call about considering a similar policy nor did he promise Zillow anything.
Following Wacksman at the booth was Jeremy Hofmann, Zillow’s senior vice president of Markets and Audiences. During Hofmann’s testimony, he stated that Zillow introduced the policy to prevent the spread of “anti-consumer private listing networks.” He also acknowledged that the standards had been introduced to have a chilling effect on the proliferation of private listing networks, stating that they had introduced the policy “as an alternative so that brokers who were not in favor of the [private listing] strategy, from a consumer perspective or from an industry perspective, had a different route to operating real estate.”
Let’s make a deal
Hofmann was also questioned about an annual “revenue increase” of $1.3 billion to $1.6 billion that Zillow offered to Compass in exchange for compliance.
“We wanted to be friends,” Hofmann said.
Compass CEO Robert Reffkin ultimately rejected the deal.
“We had one meeting about it,” Hofmann said. “They weren’t particularly interested and we never really looked into what the numbers might be.”
Hofmann also acknowledged that as part of its negotiations with Compass, Zillow offered Compass the opportunity to double down on more transactions at the broker level.
“Damage” and “destruction”
The last witness called on Wednesday was Alexander. While on the stand, Alexander testified that even Zillow’s initial enforcement of the policy was “devastating” to Compass’ programs. She claimed that the policy is “one of the reasons” why Compass has seen a “decline in both engagement and users” on its platform, and that enforcement of the policy has resulted in a lower percentage of merchants willing to use Compass’ three-phase marketing plan. Alexander said she feels this has happened because “sellers are scared of the prospect of not being able to go on Zillow.”
“Even if they are interested in the strategy and think it would add value to them, they are not willing to do it,” she said.
Alexander also confirmed some of the conversations Hoffman had discussed, characterizing the discussions as negotiations and claiming that Compass was “trying to understand” what the policy meant as it was “very unclear” to them at the time, despite Zillow making a “very high-level announcement.”
Alexander also discussed why Compass has the “black box” on its website, which indicates how many exclusive private listings it has in a buyer’s metro area. Zillow considers this public marketing of private listings and bans these listings from its site. According to Alexander, Compass maintains this “black box” because the company believes it is important “that every buyer has visibility and access to know that these listings exist and to be able to see those listings.”
Alexander’s time on the stand was interrupted Wednesday when Judge Vargas called for the end of the day. She resumed her testimony on Thursday and the hearing continued until Friday.
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