Zillow's Legal Headaches Will Go Away, Its Brand Will Not

Earlier this month, the last nail appeared to finally be hammered into the coffin of a case brought against Zillow in 2021. For most other companies, the Supreme Court's decision not to review an antitrust case that has floated to the surface of the news cycle several times over the last four years would be cause for celebration. But Zillow's legal team probably didn't find time for a beer after work that day...

Over the last four months, the U.S. portal operator has been hammered with no fewer than five serious federal lawsuits and stands accused of copyright infringement, deceptive and anticompetitive business practices, collusion and market suppression.

What are these lawsuits about, and what's at stake in each?

1. Compass vs Zillow - Who controls content visibility?

Compass, a leading US real estate brokerage, is suing Zillow over the portal's “Listing Access Standards” rule. This policy requires that any publicly marketed property be uploaded to Zillow within 24 hours or be banned from the platform. Compass alleges this “Zillow ban” is an anticompetitive scheme designed to crush competition and protect Zillow's market dominance.

Compass claims Zillow conspired with competitors Redfin and eXp Realty to enforce similar rules, hurting brokerages and restricting innovative marketing ideas like Compass’s “Private Exclusives.” This is all about the growing friction between traditional brokerages and dominant listing portals over control and transparency of home listings.

If Compass wins, other brokerages are likely to roll out similar exclusive initiatives, keeping more listings off the MLS and off Zillow for longer periods.

2. CoStar vs Zillow - Who really owns listing media?

These two just don't like each other. Before the lawsuit CoStar filed in July, the Washington-based company had heavily criticised Zillow's business model and its treatment of customers, and earlier this month, Zillow removed Matterport (owned by CoStar) virtual tours from its portal, kicking off another round of recriminations.

The lawsuit centres on alleged copyright infringement. CoStar says that Zillow used nearly 47,000 CoStar-owned, watermarked property photos without permission to bolster its rental listings. The Apartments.com owner claims these images support Zillow’s rental market expansion unfairly and without compensation, and is seeking $1 billion in damages. Zillow, for its part, maintains that the photos were uploaded by its customers who had licensed the images.

On stage and in conversation with Simon Baker at the recent PropTech & Portal Watch conference, CoStar's CEO, Andy Florance, pointed out that CoStar already has a big win under its belt when it comes to taking a company to court over copyright infringement.

"We previously had sued a company doing something like that, and we won the largest copyright judgment in US history, half a billion dollars. This one [Zillow suit] is much, much larger."

Xceligent, the CoStar rival that was ordered to pay $500 million in damages for copyright infringement in 2019, went out of business quite quickly after the suit was filed.

3. Homebuyers vs Zillow - Which agent should be promoted on listings?

This suit, filed in September, hits at the heart of Zillow's business model.

Plaintiff Alucard Taylor purchased a home in 2022 through an agent working on a Zillow Flex program, believing he was contacting the listing agent rather than a buyer's agent who had paid Zillow for the lead. The suit alleges that Zillow does not disclose the fee that it realises as revenue from this arrangement (typically 35-40% of the agent's commission) and that this violates consumer protection laws and the Real Estate Settlement Procedures Act.

The case seeks compensatory, treble, and punitive damages. The suit is a challenge to Zillow's Flex model, which the company has been championing and rolling out to new markets since 2022 as part of a major strategic shift to get closer to residential transactions.

4. FTC + states vs Zillow - Is Zillow's rental business a partnership or a payoff?

The Federal Trade Commission, joined by attorneys general from five states, sued Zillow and Redfin over a $100 million agreement made in February 2025 that allegedly suppressed competition in the online rental advertising market.

Zillow paid brokerage and marketplace operator Redfin to exit independent competition in multifamily rental listings, with Redfin agreeing to stop competing in rental ads for up to nine years and act solely as a syndicator of Zillow’s listings. The suit alleges this illegal deal violates federal antitrust laws, harms property managers and renters by reducing competition, raises prices, and discourages innovation.

The case seeks to end the agreement and restore competition in rental listing services. In practice, that could mean forcing Zillow to divest from its multifamily rentals business altogether.

A fifth lawsuit? MLSs vs Zillow - Is Zillow allowed to have a ChatGPT plugin?

On top of these, Zillow's lawyers may be billing even more court days soon. There have been some industry rumblings that the portal's integration with ChatGPT may violate the terms of the rules governing MLS data distribution.

For now, the National Association of Realtors, which has some degree of oversight in the matter, is sitting on the fence and has urged regional MLSs to review their agreements with Zillow. For its part, the portal maintains that it did its due diligence.

Lawsuits don't impact branding, and branding is (still) what matters for portals

Looking at Zillow's situation as an industry insider, the negatives stand out. Its flourishing rental business could be dismantled, and there are indications that the method behind its much vaunted uptick in mortgage attach rates in Flex markets may soon come under scrutiny.

As a CoStar representative rightly pointed out in an emailed statement to us recently, "At a bare minimum, Zillow will be stuck in multiple lawsuits for years to come."

However, while increasing legal headaches and their accompanying share price fluctuations are bad for business, they aren't necessarily a catastrophe. Examples of market leaders being bumped off by lawsuits are very few and far between.

Microsoft didn't lose its leadership in the early 2000s despite huge legal pressure. Two decades later, users are still turning to Microsoft for their software needs, even if fewer of them now look to the company for a web browser.

In a worst-case scenario, Zillow might pay out its entire cash reserves (currently $1.2 billion) in damages, lose Compass' private exclusive listings from its website, be forced to divest from its rentals business and be pressured to change how it sells its mortgage product.

It would be a massive blow internally. Shareholders would be frustrated, the press would write some sour headlines, and managers might lose their jobs.

But the next day the sun would still rise, and users would still click on Zillow.

It's easy to forget that all the people who matter here don't read the industry press, don't know about the lawsuits and don't care where the photo they're seeing comes from. People searching for a place to live might have heard that some Compass listings don't appear on Zillow for a few weeks, but at current levels, those listings represent less than 1% of all the homes on Zillow.

As U.S. market expert Mike Del Prete noted on stage at the recent PropTech & Portal Watch conference, market leaders with twenty years of top-of-mind branding are very hard to knock off.

"If you sit back and think about it, which I have done, it's so easy to get caught up in the hype... I don't know that any of this has a material impact on Zillow's Business whatsoever."

Zillow's residential sales business generated $434 million in the last quarter and has seen double-digit growth over the last three years. Seventy per cent of the company's earnings still come from this core business, and if Zillow doesn't generate $2 billion from its core in 2026, it'll be because of a market downturn, not a lawsuit.

Legal problems may end up costing Zillow a lot of money, and they may become a notch on the bedpost for Compass or CoStar, but as long as they don't cost Zillow its focus on providing the best place to find a home, the big blue brand is likely to come out the other side just fine.

Zillow's legal headaches can be framed as a migraine brought on by outside stresses or as a self-inflicted hangover. Either way, the pain will eventually pass.