Zillow Group (NASDAQ:ZG) shares rose following news that Compass Inc. has voluntarily dismissed its antitrust lawsuit challenging Zillow's listing policies. The move concludes a months-long legal dispute over rules governing how and when home listings appear on public platforms.
The suit, originally filed by Compass in June, alleged that Zillow employed anticompetitive practices by blocking property listings that had not been posted to a local multiple-listing service within 24 hours of being marketed publicly. Compass, which is the largest U.S. real estate brokerage, had been pursuing a strategy to develop a private listings network that would allow properties to be marketed with its agents prior to appearing on public listing services.
In December, U.S. District Judge Jeannette Vargas denied Compass’s request for a preliminary injunction that would have halted Zillow’s policy while the case proceeded. Judge Vargas concluded that Compass had not produced sufficient evidence to infer that Zillow possessed monopoly power in the online home search market, and therefore the injunction was not warranted.
The voluntary dismissal by Compass terminates the case before it could advance to a trial. For Zillow, the procedural end of the dispute removes an overhang that had been a financial consideration; the company had recorded legal costs related to defending the policy, which had affected its reported results.
With the lawsuit withdrawn, Zillow is able to maintain and enforce its listing-rule framework without facing a further legal challenge from Compass. The dismissal means there will be no trial-level adjudication of the allegations brought by Compass in this matter.
Market participants reacted to the development, and Zillow shares registered an uptick on the news. The resolution restores clarity on the immediate legal front for Zillow and eliminates a source of expense tied to this specific dispute.
Summary
Compass has voluntarily dismissed its antitrust lawsuit against Zillow, a case alleging that Zillow blocked listings not posted to a local multiple-listing service within 24 hours. A December ruling denied Compass’s request for a preliminary injunction, and the dismissal ends the matter before trial, removing a legal overhang that had weighed on Zillow’s financial results.