Judge allows Zillow antitrust lawsuit to proceed

An antitrust lawsuit alleging that Zillow created an illegal tying arrangement between its marketing platform and Zillow Home Loans has been allowed to continue. In a ruling on Tuesday, Judge James Robart of the U.S. District Court for the Western District of Washington denied Zillow’s motion to dismiss the suit, allowing the plaintiffs’ antitrust, consumer-protection, and unjust-enrichment claims to move forward.

The lawsuit was filed in January by Stephanie Dupuis, a real estate team leader and owner. The plaintiffs claim Zillow is a "monopoly power" and that agents like Dupuis feel it is "impossible to do business" without Zillow's involvement. They allege that this pressure led them to sign an agreement to become a Preferred Agent.

Notable in the ruling is that the plaintiffs’ monopoly claims survived. Judge Robart noted Zillow’s referral commission of 35%-40%, which the plaintiffs claim is above the market average of 20%-25%, as potential evidence of Zillow’s ability to leverage its position in the home-search ecosystem. Additionally, the judge found that the plaintiffs’ allegations that Zillow has over 60% audience share were sufficient to plead barriers to entry.

The court also found that the plaintiffs had plausibly alleged that Zillow uses its power over referrals to force agents to use its CRM Follow Up Boss. Judge Robart rejected Zillow’s argument that agents could simply leave the platform if they didn’t like the terms, noting that antitrust liability isn’t necessarily defeated simply because customers theoretically have the option of walking away. The plaintiffs’ claims that agents who fail to meet targets for mortgage pre-approvals through Zillow Home Loans could receive fewer or lower-quality leads or ultimately lose access to the program were also allowed to stand.

A Zillow spokesperson stated that the company continues "to believe the plaintiff’s claims are fundamentally flawed" and that buyers on Zillow always control their agent and lender choice. The spokesperson added that Zillow gives consumers and agents genuine choice and that the company will continue to vigorously defend itself.