There are a lot of important monopoly-related stories this week. The Senate advanced the “Big Beautiful Bill” which has lots of implications for market power, including a provision to crimp private antitrust enforcement. Also, there was some sketchy stuff as the Antitrust Division ended a big merger challenge against Hewlett Packard and Juniper Networks, on a Friday night, without a press release until the next day. Hmmm. Plus, Amazon got sanctioned by a judge for falsely claiming that its documents were legally shielded from investigators.

But the big piece of news I want to focus on from the past week is a private antitrust suit filed against home buying portal Zillow by national brokerage Compass. This complaint, while important in and of itself, is part of a series of antitrust suits and acquisitions implicating one of the most powerful cartels in American history, the National Association of Realtors. For some context, the Department of Justice Antitrust Division has been litigating and investigating the real estate brokerage industry since the 1940s, so this one goes way back.

But something is different now. The home buying industry, once dominated by an age-old cartel, is undergoing a contested effort to change. And the antitrust bullets, in the form of private lawsuits, are flying, which usually means that an industry is both messed up and at an inflection point. The question is whether it will be fully de-concentrated and the cartel broken, or fall prey to an even bigger kind of monopoly, a tech-infused platform that will be even more difficult to dislodge.

Let’s start with the stakes. The biggest consumer purchase, and the biggest store of savings for most Americans, is the home. It’s the largest asset class in America. Buying and selling a home is fraught with fear, it’s something people do a few times in their life, there are a bunch of seemingly foreign terms - title, escrow, et al - so a host of professional services exist to facilitate the transaction. It’s also a heavily regulated space; land has always been managed through public registries, but also, home buying is an old industry that has gone through bouts of cheating, crises, racism, and scandal, along with the attendant political responses.

The industry is composed of state-regulated real estate brokerage firms and individually licensed real estate agents, as well as title insurers, mortgage originators, and a host of real estate service providers that operate in an ecosystem. The main Federal law regulating the industry is the Real Estate Settlement Procedures Act, or RESPA. RESPA is supposed to bar conflicts of interest like steering payments, but as you’ll see, that’s adorable.

Last week, the largest real estate brokerage in the United States, Compass, filed an antitrust lawsuit against the nation’s biggest real estate portal, Zillow, over Zillow’s choice to exclude certain Compass listings from its maps. The two companies have different strategies for attempting to monopolize access to real estate listings, and they are fighting over who should win. A third company - Rocket - is involved as well. And the key is who controls access to listings.

The way the industry talks about the current inflection point is by pointing at the big guys in the industry - Zillow, Compass, and Rocket - and saying they are all pursuing the “Housing Super App Strategy,” with other brokerages and lenders also making deals. The housing trade press has headlines full of drama about this war.

The starter pistol went off in November of 2023, when NAR, the long-time ruler of the listings map, lost a major class action antitrust lawsuit. Realtors have a unique commission structure, and in the U.S., they charge 6% of the home price for every sale, “versus 1% in, say, the United Kingdom or Singapore. This middleman business takes in about $100 billion a year in revenue, supporting millions of realtors but also costing Americans who buy and sell homes a non-trivial chunk of their life savings every time they buy or sell a house.”

The reason is that NAR controls the listing information about housing markets through private databases called multiple listing services (MLS), which have details on houses, such as listing price, bedrooms, bathrooms, square footage, and so forth. Access to them is key. Zillow and Redfin, for instance, populate their websites with information from these databases. In the lawsuit, the gist is that NAR imposed a rule that made it impossible to show houses for a lower listing fee. That rule got struck down, and NAR had to pay a billion dollars in damages.

At the time, it seemed likely that commission rates would in turn decline. But so far, they haven’t. And the reason is that realtors and NAR have effectively found a way around the settlement. A law professor, Tanya Monestier, who had sold her house in 2022 and thus was part of the affected class, filed a 132-page formal objection to the settlement, explaining how agents were adopting “practices designed to maintain artificially high commissions.”

The writing for NAR, however, has been on the wall for years now. As I noted above, the Antitrust Division itself has a long-running suit against NAR as well. The old high-priced but decentralized model of real estate will likely dissipate, and something new, a platform-style model, is coming. “The real estate transaction itself is undergoing tectonic change,” says one analyst. “[The National Association of Realtors] settlement is just the start. We’re watching the unbundling of a 112-year-old commission structure. A wave of agentless transactions is coming—and Rocket is positioning to serve them end-to-end.”

Enter a few new players. There’s Compass, which is a Softbank-owned company started by a McKinsey alum and Goldman Sachs alum in 2012. It’s a classic roll-up, an attempt to get as many brokers working through one company as possible. It owns Christies, and recently, it began holding talks to buy Warren Buffett’s real estate company, HomeServices of America. They also provide title, escrow, and mortgage servicing.

Their strategy is to break outside of the MLS system by listing Compass-represented homes as “Compass Private Exclusives” on the Compass internal platform, meaning that both customers and brokers would have an incentive to join Compass so they could see the inventory. “Compass agents and Compass.com have more inventory than third-party sites,” said Compass CEO Robert Reffkin on an earnings call, “sending a strong signal to buyers that if you aren’t working with Compass agents or aren’t searching Compass, you are not seeing all the inventory.”

It’s not just a monopolization play, of course, or so Compass claims. Listing homes internally at Compass allows for customers to “test list prices, experiment with marketing approaches, and gather early feedback,” all of which matters when you are trying to make a house seem desirable. But it was also an obvious play to acquire market power, as they note in their case against Zillow. “As Compass thrives, it will divert consumers and users from Zillow’s platform to Compass’s, thus disintermediating Zillow from the process,” says their complaint.

Then there’s Zillow, a firm that established its strategy through the home portal route. Zillow was founded in 2006 by a Microsoft employee, and it also did a roll-up during the Obama era. It bought Postlets (2011), Hotpads (2012), StreetEasy (2013), and Trulia (2014.) The $3.5 billion Trulia purchase was particularly flagrant; the New York Times reported that the two would have 61% of internet listings, which means it was a merger-to-monopoly in a dynamic and fast growing field. And the CEO of Zillow, Spencer Rascoff, literally said that the two firms were rivals. “We’ve been competitors and rivals for nine years,” he told the Times, “but I’ve always had respect for them.” Nevertheless, FTC Commissioners Maureen Ohlhausen, Josh Wright, and Terrell McSweeney issued a classic Chicago School-style statement clearing the merger. Zillow today makes its money by selling leads, it also offers mortgage origination services, title and escrow, and lead generation used by over 100,000 agents.

And finally, there’s Rocket Mortgage, which is the biggest mortgage originator in America, and recently bought the biggest mortgage servicer in America - Mr. Cooper for $9.4 billion - as well as the second largest portal for homebuyers, Redfin, for $1.75 billion.

Redfin handles front-of-house customer acquisition, and Rocket does mortgage origination and lending, where it’s already the dominant direct-to-consumer player. Finally, Mr. Cooper has a $2.1 trillion mortgage servicing portfolio and 4.6 million customers. Says Orson: “This is vertical integration on an entirely new scale.”

It’s also a monopoly play. Here’s a slide I took from a Mr. Cooper’s investment presentation. If you look at the right side, you’ll see all the standard monopolization words - “concentrated market,” “economies of scale,” “high entry barriers,” etc. The acquisitions by Rocket got zero scrutiny from the Trump administration, which is now the norm in mergers.

Rocket is adding loan servicing and refinancing to the additional services. It’s not clear which of these services should really go together; the Consumer Financial Protection Bureau, when it existed, had sued Rocket for illegal kickbacks.

Anyway, back to the Compass-Zillow fight. Zillow gets its listings from the databases of the National Association of Realtors and various affiliates. It recently imposed something called the 24-hour policy, which says that if a home is publicly listed for more than 24 hours before being put on an MLS and Zillow, then that home is banned from going on Zillow, forever. Redfin quickly followed suit. The idea is that Zillow, if it was going to list Compass houses, would only do so if Compass didn’t try to foster its own listing service that excluded Zillow. More broadly, fragmenting the home buying market into private listings accessible to certain brokerages is just bad for everyone.

Compass sued, and its CEO Robert Reffkin claimed that Zillow was seeking to preserve its monopoly, and work with smaller players like Redfin (aka Rocket) as part of a conspiracy. "No one company should have the power to ban agents or listings,” he said, “simply because they don't follow that company's business model."

So who will win this fight? That’s not clear. While the Compass case isn’t absurd, I do think they’ll have a tough time. But the more likely result is an out-of-court settlement. More broadly, real estate lawyer Greg Hague predicts that this lawsuit will “trigger the most dramatic transformation of real estate technology and home marketing options” since the 1980s, and suggests that new players, such as Google, Meta, or Amazon, could enter the space. Google Maps has obvious synergies with real estate. The Antitrust Division is likely to step out of the fight, as the CFPB has. The other parts of the government that could address the problem, such as the Department of Housing and Urban Development or the Federal Housing Finance Agency, are disinterested. So this one will be fought out via private cases, mergers, and corporate strategy.

The difficulty here in figuring out what will happen is that it’s a fragmented industry that nonetheless has an artificially high commission rate. And there’s no inherent economic logic that I can see in integrating all of these different services, except for capturing the ability to do steering payments that RESPA bars. Compass, Rocket, and Zillow are all trying to become the vertically integrated organizer of the home buying industry, from home search to mortgage to refinancing. Hopefully, none of them win, and realtors remain mostly independent. Maybe one day the commissions might finally come down.

Anyway, housing has been the fulcrum for the American order for as long as I’ve been paying attention to politics, from the financial crisis of 2008 to this new roll-up/monopolization fight. Most parts of the industry today are getting squeezed, from homebuilding to FICO scores. The difference here is that realtors have always had a cartel. What will take its place? I’ll be keeping an eye on it going forward.

And now, the rest of the round-up, after the paywall. The “mother of all lawsuits” against Meta is about to go to trial in Delaware, some ugly aspects of the Big Beautiful bill including a “kill shot” targeted at private antitrust attorneys, and agency embarrassments as the FTC de facto forces big ad agencies to spend more on conservative clients to get a merger through. Plus, it turns out that Robert Kennedy Jr. knows very little about his agency and his job, and that’s getting exposed. And elite Democrats are driving themselves crazy over NYC mayoral primary winner and Democratic socialist Zohran Mamdani.

Read on for the rest of the news. And if you’re not a subscriber but want access, you can always do a trial to see if you like it...