Legal Storm Hits America's Most Popular Real Estate Website

Newsweek

2 days ago

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America's most popular real estate website, Zillow, has been hit by a new lawsuit this week as rival platform CoStar Group claims it has illegally used tens of thousands of its watermarked images.
It is the second legal battle facing Zillow this summer, after New York-headquartered real estate brokerage Compass filed an antitrust lawsuit against it in late June alleging that Zillow's new listing policy restricts competition and harms consumers.
While the two cases are very different, Ladah Law Firm's trial attorney Ramzy Ladah told Newsweek that the two lawsuits converge on the same question: "How much power a dominant digital portal may wield over the lifeblood of residential real estate, which is timely, accurate listing data, and the media that sells it?"
One lawsuit essentially asks whether a platform can police distribution rules in a way that disadvantages rivals; the other asks whether that same platform can lawfully display content it did not license.
"Together, they test the outer limits of platform control in housing," Ladah said.
Newsweek contacted Zillow for comment by email on Wednesday but did not receive a response.
What Are the Lawsuits About?
CoStar Group, which owns the website Apartments.com, LoopNet, and Homes.com, filed its lawsuit against Zillow on Wednesday, accusing the company of posting 46,979 of their copyrighted real estate listing photos without their permission.
According to the lawsuit, filed in a federal court in Manhattan, Zillow's use of CoStar Group's images undermined its ability to stand out against competitors, particularly for rental units.
"Zillow's theft of tens of thousands of CoStar Group's copyrighted photographs is nothing short of outrageous," Andy Florance, CoStar Group's founder and CEO, said in a press release on Wednesday.
"Zillow is profiting from decades of CoStar Group work and the billions of dollars we have invested. Even worse, Zillow is magnifying its infringement on Redfin and Realtor.com," he added. "If these other sites do not immediately remove our images, we will have no choice but to sue them as well. We are committed to stopping this systematic infringement and holding the wrongdoers to account."
Compass filed its antitrust lawsuit in June after months of back-and-forth between the two companies over Zillow's policy to ban private home listings. Essentially, the policy means that if a home seller or their agent markets a property off Zillow for more than one day, then that home cannot be listed on its platforms.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, alleges that "Zillow has sought to rely on anticompetitive tactics to protect its monopoly and revenues in violation of the antitrust laws."
Zillow has denied having engaged in anticompetitive tactics, saying that the company has always stood for "transparency and equal access to information" while "Compass has been waging a campaign against market transparency to the detriment of consumers and agents." The practice of taking a home off Zillow and test prices elsewhere, Zillow said, makes the housing market less transparent.
"Zillow's 'Zillow Ban' policy can force agents to play by their rules if they want visibility. This puts pressure on independent firms that use private listings or want to test pricing before going public," Keely Smith, the lead interior designer at JD Elite Interiors, told Newsweek.
"It might seem like an agent problem, but when listings get funneled through a single pipeline, it narrows options for everyone. I've seen sellers struggle with fewer marketing avenues and buyers miss out on homes that don't show up on the first few pages of a Zillow search," she added. "It chips away at the flexibility and local knowledge that smaller brokerages bring to the table."
While CoStar is asking for a permanent injunctive relief and "a substantial award of damages" that could reach up to $1 billion, Compass is asking for an injunction that would prohibit Zillow from implementing and enforcing its ban or similar policies.
"The antitrust case asks whether platform rules have crossed the line from hard bargaining into unlawful maintenance of dominance," Ladah told Newsweek. "The copyright case asks whether the race to comprehensive inventory has led to sloppy or overbroad content ingestion."
Legal Storm Hits America's Most Popular Real Estate Website
Legal Storm Hits America's Most Popular Real Estate Website
Newsweek Illustration/Canva/Getty
What Does This Mean for the US Real Estate Market?
If Compass prevails in its case, Zillow and other similar portals "may need to relax rules that penalize off-platform or delayed marketing," Ladah said. That, in turn, could increase the diversity of channels through which consumers find homes and reduce the gravitational pull of any single portal—chipping away at the power that Zillow has gained in the past couple of decades.
A Compass' victory might also "erode the incentive for aggregators to invest in data quality and consumer tools if they cannot require prompt, comprehensive inclusion," Ladah added. "Courts often weigh those tradeoffs under the rule of reason, and remedies can be tailored, so a likely outcome is not a free-for-all but a narrowing of permanent exclusion coupled with clearer, less punitive compliance paths."
If CoStar wins its case and establishes widespread, unlicensed use of its material by Zillow, "the result will be tighter provenance controls, more robust license audits, and possibly a re-pricing of photo rights across the ecosystem," Ladah said.
"That would push portals and MLSs to adopt stronger hash-matching, metadata preservation, and takedown workflows, and it would push brokerages to obtain clean, written licenses from photographers that explicitly cover syndication to every endpoint where a listing may appear."
While this is all very technical, these lawsuits could have a direct impact on homebuyers as well. A check on Zillow's dominance on the real estate market, Ladah said, "could surface more listings across a wider set of sites, which feels pro-consumer at first glance," but "the countervailing risk is fragmentation."
"If agents feel freer to run staggered or private campaigns, or if portals reduce cross-syndication to mitigate copyright exposure, some homes may be harder to discover in one place," Ladah said. "The net outcome will depend on whether courts and the industry can maintain broad, near-real-time sharing while curbing exclusionary rules and tightening IP compliance."
Home sellers, on the other hand, are currently often limited by policies that force immediate publication to a single platform.
"If those policies soften, sellers and listing agents may regain leverage to calibrate visibility without risking permanent banishment from high-traffic sites," Ladah said.
The outcomes of these two legal battles, Ladah explained, are likely to influence not only how Zillow operates, but also how the entire digital architecture of U.S. homebuying and renting is organized.
"A win for Compass or CoStar would likely democratize access and strengthen IP compliance, with some risk of short-term fragmentation," he said. "A clean sweep for Zillow would entrench the current gatekeeper model and reward strict distribution discipline, which could preserve consistency and consumer familiarity at the possible expense of competition at the margins."
Either way, Ladah said, the message for the market is the same.
"Treat access rules and content rights as core legal infrastructure, not housekeeping. The next phase of real estate's digital era will be built on whichever of those two pillars the courts reinforce," he said.