To CoStar Group CEO Andy Florence, the recent trade secrets lawsuit filed against the company by Move, Inc., the parent company of rival real estate listing portal Realtor.com, is all a “PR stunt.”
“They're essentially inventing a false story, using relatively inexperienced people as pawns, and then getting that story out there,” Florence said. “So why do they do that? What's their strategy? Realtor.com is owned by NewsCorp, a global, very sophisticated media organization run by the Murdoch family, and they have a stronghold in the media industry.”
In response to Florence's comments, a Realtor.com spokesperson said, “We don't comment on pending litigation. The court documents speak for themselves.”
Florence said he believes the lawsuit, filed against CoStar Group and former Realtor.com employee and current Homes.com employee James Kaminski, stems from the real estate listing platform's recent struggles that, by CoStar's standards, have caused the company to fall behind Zillow and Homes.com in the so-called “portal wars.”
“The numbers are clear. The numbers have been verified. Our Homes Network has 156 million monthly unique visitors and they have 72 million. So we're like 84 million more monthly visitors than they are and that's a big problem for them. It's a big problem,” Florence said.
Additionally, Florance expects changes to come to the real estate industry through changes in business practices outlined in the National Association of Realtors' Fee Litigation Settlement Agreement, changes that he believes will better suit Homes.com's “Your Listing, Your Lead Model” than the model used by Realtor.com, which Florance calls “lead conversion.”
“They take the leads that come in, trick home buyers into thinking the person calling is a seller, and then sell the leads to someone else. Agents hate this business model,” Florence says. “I've seen them get angry at Zillow, but some agents are confused and think that Realtor.com is part of the NAR and has their interests first.”
Florence noted that Zillow has been diversifying its offerings over the past few years and is moving away from the lead conversion model, which he believes is a smart move because he feels the lead conversion model is “not viable.”
“Realtor.com has responded by doubling down on lead diversion and running a PR campaign to confuse everyone,” Florence says. “This is the reality of how they operate, and the company has been very aggressive in the media arena.”
In the lawsuit filed Tuesday in U.S. District Court in California, Move alleges that Kaminski, who worked at Realtor.com until January and was hired by Homes.com in March, stole trade secrets to facilitate Homes.com's rapid growth.
Move alleges that Kaminski accessed Realtor.com documents without detection until June of this year, even though he left the company in January and joined Coster in March. The lawsuit says Kaminski accessed Realtor.com information “at least 37 times after being employed by Coster,” violating federal and state computer fraud laws.
The documents that Move alleges Kaminski accessed include information about planned content for Realtor.com, ideas for future articles, metrics showing user traffic, contact lists, a list of Realtor.com employees and their compensation, and other non-public business information.
The lawsuit alleges that Kaminski leads a team of writers at Homes.com developing a product similar to Realtor.com's news and insights page, but Florence says Kaminski actually edits apartment listing descriptions. Florence said he had never heard of Kaminski before filing the lawsuit.
“I'd never met him,” Florence said, “and I spoke to five or six people before I found someone who was willing to look into him for me. I really feel sorry for the guy. He's effectively a writer and all of a sudden he's been covered in the media with this nonsense and he's being hounded by News Corp.”
Florence said CoStar will support Kaminski throughout the litigation, assuming Kaminski has in fact done nothing wrong.
To Florence, Move's escalating dispute with Zillow wasn't a surprise given Move's track record, which includes suing Zillow after Errol Samuelson left the company to join Zillow in 2014. In the 2014 lawsuit, Move alleged that Samuelson and Zillow stole trade secrets and proprietary information and then tried to cover up the alleged theft. The two sides reached a settlement in 2016, with Zillow paying Move $130 million.
Despite the similar claims, Florence believes the suit comparisons end there.
“I think it's a total mismatch,” Florence says. “We're not talking about executives, we're talking about editors who write about the mansion.”
Ultimately, Florence said the lawsuit is “very ridiculous and a little pathetic” and likely won't make much of a splash.
“I think it's just a cluttered application, not very well thought out, knee-jerk reaction,” Florence said. “I think it's because the 'your listing is your lead' model that we have going on is going to be a big program for Realtor.com. Agents definitely like it.”