This week I’ve received no fewer than three press releases whose narrative beyond their details is one of property portals and their political influence.
The first one came from Malaysia where PropertyGuru has written an open letter style policy wish-list directed at the government ahead of its budget announcement. The second was from Spain where Fotocasa wants journalists to know that it is not in favour of a proposed new law around rental price controls and the third saw REA Group join a tech lobby.
Two weeks ago I came across a story that, in my humble opinion, is far more interesting than all of these and encapsulates a lot of the current narrative around big PropTech companies, governments, data and intermediaries.
If you didn’t read the story, essentially local lawmakers in Michigan are deciding whether to force local authorities to make housing data cheaper for companies like Zillow. Local civil servants are not happy about it and are using opinion pieces to mobilise anti-Zillow sentiment from recent viral videos and heightened realtor angst generated by the portal's ShowingTime acquisition.
Zillow is fighting back in the PR war and using similar opinion pieces to argue that their way is the way of the future.
The interesting thing about it is that you can bet your Zillow-brokered mortgage that what we’re seeing is only the public part of a battle which is being waged through connections and lobbyists in some corridors of power somewhere.
Ultimately, whichever side wins the battle for public opinion will make it easy for politicians and lawmakers to back them.
Looking back over these and other stories we’ve covered in the last 18 months, one of two things seems to be happening: either classifieds companies are rubbing up against decision-makers more, or it’s just more out in the open recently.
The degree to which these portal companies’ opinions are spread around may be directly related to the actual level of political influence they exert.
While reeling off a less than cryptic tweet, filming a policy takedown monologue or writing a wish-list are clearly designed to win over the public as well as governments, there are other, larger, companies that almost certainly wouldn’t need to resort to such tactics.
Those companies that have political influence tend not to flaunt it in public.
Axel Springer owns leading portals in France, Belgium, Israel and the #2 in Germany. It is also the largest publishing company in Europe and allegedly has some deep connections within both the German and EU governments.
Leading Australian property portal REA Group is majority-owned by the Murdoch family - a bunch of people who literally spawned a hit TV series around their influencing and game playing. It’s not like the portal company is an insignificant branch in the News Corp empire either. REA Group represents around 85% of News Corp’s market value according to a UBS report from 2020.
This level of influence is both hard to find examples of (for obvious reasons) and potentially extremely important.
The European Union is just about the only entity that has successfully stood up to Google encroachment. Google has been coming for the autos industry (and many others) in America for some time and there has long been speculation that the bigwigs in Palo Alto have their eyes on a similar vertical which happens to be the largest asset class in the world.
With that sort of context, it makes sense that a company like Axel Springer would use its size to have a voice at the EU table and nudge the decision-makers there towards a policy that protects its real estate classifieds assets.
In Australia News Corp’s influence is legendary and whether or not it had anything to do with this quote from REA Group’s latest annual report is a moot point because it can’t be proven either way and ultimately it doesn’t matter.
“As Victoria worked its way out of lockdown in September 2020, the Group worked alongside the property industry and the Real Estate Institute of Victoria to successfully lobby the state government for the safe easing of real estate restrictions to align with other comparable low-risk industries.”
The point is not that these companies are doing anything nefarious or something that their competitors wouldn’t do - REA’s rival Domain is owned by Aussie media giant Nine Entertainment, hardly a choirboy itself when it comes to influence - but that their size allows them to do these things. There is power in numbers and an advantage in size for most, for now...
Most portal companies seem to have worked out that there are diminishing returns on a traditional classifieds business model. This means that portals need to move into other areas of the value chain - stay tuned for an Online Marketplaces report into that by the way.
As they do so, these companies rub up against other businesses, generate headlines and attract scrutiny from governments. When you are your country’s top-performing public company, like in the case of Mercado Libre, calls for your business to be broken up or even nationalised have to be treated as par for the course.
The easiest way for classifieds companies to move towards being the ‘fintech enabled marketplaces’ of the future is through M&A. It might be easier than organically moving into new areas, but in some countries, mergers and acquisitions are becoming a lot less straightforward.
Lina Khan’s appointment as the head of the FTC seems to have ended the days of the American anti-monopoly body waiving mergers through. Zillow has already experienced this with its $500M purchase of ShowingTime coming under threat while CoStar has moved its M&A efforts overseas.
Some in The UK are speculating that estate agents’ pleas for the competition authorities to look into Rightmove might finally be about to come true and the news in Russia today is that competition authorities have blocked Prosus-owned Avito's acquisition of Cian.ru due to monopoly concerns.
As consolidation and diversification in the industry accelerate the friction being taken out of property transactions is transplanted elsewhere. Agents are a numerous group of people to take on and disintermediate and the law of averages dictates that some of them will have friends in high places.
Portal companies garnering political influence either through the size of their parent company, the strength of their brand in the cultural zeitgeist or by hiring people to make noise in the media is not new and, providing its above board, is morally not any worse than any other group protecting its interests.
What it is, is something we are likely to be reading much more about.