Federal antitrust regulators say they decided to allow the nation’s most popular real estate search portal to acquire its closest rival because real estate agents have “numerous” ways to market their services, and that there was “insufficient evidence” that the deal would result in higher advertising costs or hurt innovation.

But because the “competitive dynamics” of online advertising industry are “rapidly changing,” the Federal Trade Commission said it could still revisit the question of whether Zillow’s acquisition of Trulia might allow it to impose advertising price increases on a subset of agents.

In the course of a “comprehensive six-month investigation,” the FTC said it uncovered “documentary evidence tending to show that Zillow and Trulia compete closely with one another for consumer traffic and for real estate agent advertising dollars.”

However, the FTC said, “There is evidence that real estate agents use numerous methods in addition to the platforms operated by Zillow and Trulia to attract customers, and there was insufficient evidence leading us to conclude that real estate agents would face higher prices for advertising after the merger, or that the combined company would have a reduced incentive to innovate either on the consumer side or the advertiser side of its platform.”

FTC staff looked at whether “the particular sets of products and features offered by Zillow, Trulia, and other real estate portals constitute a relevant product market” to two groups: all real estate agents, and a subset of “high-performing” agents who “achieve the highest return on investment (‘ROI’) from advertising on real estate portals.”

The FTC decided that while Zillow and Trulia “closely tracked one another in terms of consumer traffic, site features and pricing,” that the balance of evidence reviewed “does not suggest that a hypothetical monopolist of real estate portals could profitably impose a price increase on agent advertising.”

But the FTC said its decision was based on “the specific facts and evidence available at this time.” Regulators said they reserved the right to evaluate the anticompetitive effects on another subset of agents — “a narrower product market” — in the future, “should the evidence support such a conclusion.”

One reason it doesn’t seem like a given that Zillow can raise prices now that it owns the top two real estate portals is that “there is evidence that a high volume of agents leave Zillow and Trulia on a regular basis, suggesting that alternative advertising sources may constrain their pricing,” the FTC said.

The most significant form of agent advertising is “ZIP code targeted,” the FTC said, where agents who are active in a particular ZIP code can use a real estate portal to buy ads that show up next to properties for sale in that area. But there was “no reliable evidence as to the magnitude and proportion of high-performing agents that exist in any particular ZIP code,” the FTC said.

The FTC also found “no evidence that the parties have the ability to price discriminate and thereby target the high-performing agents with a post-transaction price increase.”

Another factor limiting Zillow’s ability to jack up prices is that real estate portals “represent only a small portion of agents’ overall spend on advertising,” the FTC said. There was “no evidence that real estate portals offered a higher ROI compared to other forms of advertising to a sufficiently high percentage of agents.”

Also, “despite significant effort,” the FTC said it couldn’t quantify whether a “significant portion of Zillow’s customers” would defect to Trulia in the face of a price increase, or vice versa.

There was also no “robust relationship between Zillow’s pricing to advertisers and Trulia’s presence in a particular geographic market.”

As to the deal’s potential to harm competition between real estate portals for consumer traffic, Zillow and Trulia “will continue to have strong incentives to develop new features in order to grow its consumer audience and thereby increase its advertising revenue.”

The FTC expects that there will still be “significant competition for consumer traffic from the remaining portals like realtor.com, online brokerage services such as Redfin, and other consumer-facing online real estate products.”

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