In its own public comments to the DOJ/FTC, Zillow chose to take aim at NAR-backed broker data company Upstream and the largest state Realtor trade group in the country, the California Association of Realtors.

Looks like when given the opportunity to bite, industry giants fighting for their place in the minds of agents and consumers will take on the challenge.

Tuesday, July 31 was the last day the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) accepted public comments on the state of competition in the real estate industry. More than four dozen industry players responded to the call, touting the competitiveness of the current market, bringing attention to anticompetitive practices or often, a mix of both.

The National Association of Realtors seized the chance to blast real estate tech giant Zillow in its public comments to the agencies. And in its own public comments, Zillow chose to take aim at NAR-backed broker data company Upstream and the largest state Realtor trade group in the country, the California Association of Realtors.

“Ostensibly, the goal of Upstream — an industry consortium of would-be competitors aiming to consolidate data in one place — is to address data input inefficiencies. However, members of Upstream’s board have repeatedly commented in public settings and in written communications that one goal of Upstream is to allow brokers to restrict data distribution to online portals (e.g. delayed listings, limited listing information, limited photos),” Zillow Group said in comments submitted to the DOJ and FTC Tuesday and shared with Inman.

“Unreasonable restrictions on the sharing or distribution of listing data could also negatively impact smaller brokers who may not be participants in the consortium as well as make it harder for new entrants and smaller companies to compete fairly,” the company continued.

“Additionally, MLSs could potentially lose the ability to address the needs of local jurisdictions and market participants. Real estate is fundamentally a local operation, and a nationwide database of listings and related information controlled by large brokerages could lead to the erosion of data access for consumers.”

Zillow noted there are various barriers to listing data access that the company deemed “protectionist.”

“Some large brokerages refuse to provide all their listings to Zillow. If sellers understood that their fiduciaries were restricting data from appearing on the largest real estate site in the U.S., they would likely be upset. Initiatives like Upstream make the potential for such behavior more feasible and commonplace,” the company said.

One reason some agents and brokers don’t allow Zillow to display their listings is because they resent the appearance of competing agent ads next to their listings. Zillow’s Premier Agent ad program is its main source of revenue, but the company maintains it is also a consumer benefit.

“Zillow’s Premier Agent program is a clear straightforward way for prospective buyers to find and work with a buyer’s agent who is representing their financial interests,” the company said in its comments.

“During the FTC-DOJ workshop [in June], some participants went to great lengths to criticize the ability of buyer’s agents to engage and communicate with consumers directly, whether through advertising on third-party websites or their own individual broker websites,” the company added.

“Many of these comments seemed to be a concerted effort to discourage the use of buyer agency by consumers — which was pointed out by a DOJ attorney during a panel … Zillow maintains that consumers are generally best served when represented by agents who have a fiduciary responsibility to one client in the transaction. Policies and actions to curtail the use of buyer agency are harmful to consumers.”

Upstream responds: ‘A misrepresentation of facts’

Upstream CEO Alex Lange has previously said, “There is nothing anti-competitive about Upstream.”

Upstream Pres. and CEO Alex Lange

Alex Lange

Instead of aggregating control, Upstream allows individual brokers to manage only their own listings. Upstream doesn’t control where broker data goes.

“Upstream simply provides an ecosystem for the brokers. We don’t/can’t enforce anything. It’s the broker’s data to do with as they wish,” he said.

In an emailed statement responding to Zillow’s comments, Lange said, “It’s no surprise that Zillow would make such an assertion in self-interest, but it’s a misrepresentation of facts. They’ve had representatives on every [Upstream] webinar and public demonstration and have seen the system. Upstream will improve the consumer experience as integrated vendors will have access to higher fidelity data in most cases.

“When Upstream integrates with a vendor, we configure the system to give that vendor/product combination exactly the fields they need. No more. No less. The broker has visibility into which fields are being sent but cannot arbitrarily remove fields. That would break the integration.

“If a broker determines they don’t want a certain field to distributed, they must notify Upstream, and we work with the vendor to determine if it is even possible. If all parties agree, we will create a ‘one-off’ configuration. Why would you send hundreds of fields to a ‘Just Listed’ postcard vendor when they need only six and have to discard the extra information sent?”

It’s true that Upstream participant brokers can choose to not distribute photos to a particular recipient, but they can choose to either send all or none — not a selection of photos, according to Lange.

“Why would your transaction management system need access to photos? When we send photos, they are uniquely ‘tagged’ so the broker knows which vendor was a bad actor if they are misused or shared without permission. They can select how many years of off-market listings to send, what property status’ to send, what types of properties and whether sales information and confidential fields should be sent,” Lange said.

He compared Upstream to identity theft protection company LifeLock, but for seller property data.

“Consumers should be relieved that their broker (their fiduciary) is focused on protecting their data by only sending the data needed by the vendors used to market their home,” Lange said.

“The irony of this entire assertion is if Zillow integrated with Upstream and were a ‘good citizen’ regarding use and display of the data, they would get listing updates faster than a broker feed or IDX in [markets where Upstream feeds to the MLS] and better photos and videos in all markets.”

Lange spoke with staffers from the DOJ and FTC ahead of the agencies’ joint workshop on real estate competition, but participants of the public workshop ultimately did not discuss Upstream.

C.A.R. ‘refuses to negotiate’

Zillow Group, which owns transaction management platform dotloop, also brought up a years-long fight it’s had with the California Association of Realtors over its transaction forms.

The trade group’s more than 190,000 agent and broker members get the forms at no additional cost with their C.A.R. membership.

However, unlike other Realtor associations who license their forms for use with several different transaction management platforms, C.A.R.’s copyrighted electronic forms are only available through a software company that C.A.R. owns a majority stake in, zipLogix.

“The California Association of Realtors (C.A.R.) has created a form-set that is so ubiquitous that many agents will refuse to review an offer submitted on any other forms,” Zillow told the FTC and DOJ.

C.A.R. refuses to license its forms to any entity other than zipLogix. Zillow has offered to license C.A.R.’s forms on the same general terms we have in license agreements with Realtor associations in other states. We have also provided requests from C.A.R.’s own members asking that they license the forms to Zillow. After nearly three years of requests, C.A.R. continues to refuse to negotiate with us.”

At the same time, NAR raised its annual member dues earlier this year in part to continue to provide zipLogix’ transaction management platform to its 1.3 million members at no additional cost — despite the fact that several hundreds of thousands of them use a different transaction management platform.

“[That subsidy] makes it difficult for Zillow and other providers of digital transaction platforms (e.g., Instanet, Skyslope) to compete,” Zillow said.

Scott Petronis

Scott Petronis

Zillow is not alone in such complaints. Scott Petronis, chief product and technology officer at brokerage eXp Realty, recently bemoaned at Inman Connect San Francisco how difficult it is to get a license to access copyrighted transaction forms in certain states without paying “hundreds of thousands of dollars to somebody who simply wants to pocket that to keep the status quo.”

“That’s the crap that we have to deal with,” Petronis said. “There are these artificial walls that have been created in this industry that have forced us to find technical solutions and spend ridiculous amounts of money to circumvent some of these things that have nothing to do with the true accessibility of data.”

Protecting C.A.R.’s intellectual property

C.A.R. did not respond to a request for comment by publication time, but in its own comments to the FTC and DOJ, the trade group emphasized its efforts to create, control and update the forms.

June Barlow

“To control updating these forms (which is done twice every year), to protect C.A.R.’ s intellectual property, and to assure only authorized users access and use the forms, C.A.R. distributes the forms through zipLogix, which is company in which C.A.R. became a majority owner,” June Babiracki Barlow, C.A.R.’s general counsel, told the agencies.

“This distribution allows protection of the forms so that C.A.R. members know they are authentic and up to date, and can rely on their content as being compliant with relevant laws. It also allows C.A.R. to be responsive to its members with respect to privacy of the data from the transaction, including that of buyers and sellers, and relating to the members itself. All of these protocols take significant resources.”

Forms are only available to association members who pay their dues because “C.A.R. members believe one licensee should not be able to gain a competitive advantage over another by obtaining valuable member benefits without paying for them,” Barlow continued.

“At the core of intellectual property is the right to exclude, without which some producers would abandon their efforts for fear of freeriding (unlicensed sharing),” she said.

“[B]y affording protections for intellectual property, Congress plainly recognized that free-riding on the innovations of others chills innovation and creates far more serious, long term competitive harm. The procompetitive effects and efficiencies of standardized forms such as C.A.R.’ s take no action to disincentivize such innovation and investment.”

Email Andrea V. Brambila.

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