To Andy Florance, the CEO of CoStar Group, the trade secret lawsuit Move, Inc., the parent company of listing portal rival Realtor.com, recently filed against his firm is all a “PR stunt.”
“Effectively, you create a bogus story and you use a relatively junior person as a pawn and you get a story out there,” Florance said. “And the question is why? What is their strategy with that? Realtor.com is owned by NewsCorp, which is a global, super sophisticated media organization run by the Murdochs, so they play hard ball in the media space.”
In response to Florance’s remarks, a Realtor.com spokesperson said the firm does not “comment on pending litigation. The court documents speak for themselves.”
Florance said he believes the lawsuit, which was filed against CoStar Group and James Kaminsky, a former Realtor.com employee and current Homes.com employee, was motivated by the listing platform’s recent struggles, which, by CoStar’s metrics, have caused the firm to fall behind Zillow and Homes.com in the so-called “portal wars.”
“The numbers are clear. The numbers are verified — we have 156 million unique monthly visits for our Homes network and they have 72 million, so we are about 84 million ahead of them in monthly visitors and that is a nine alarm fire for them. That is a big problem,” Florance said.
Additionally, Florance anticipates changes come to the real estate industry via the business practice changes outlined in the National Association of Realtors’ commission lawsuit settlement agreement are better suited for Homes.com’s “your listing, your lead model,” over the model Realtor.com uses, which Florance calls “lead diversion.”
“They take leads that are coming in and deceive the homebuyer into thinking that the person they are calling is the listing agent and then sell that lead to someone else and agents hate that business model,” Florance said. “We’ve seen them upset with Zillow for doing that, but some agents are confused and think Realtor.com is part of NAR and that it has their best interests at heart.”
Florance noted that Zillow has been working to diversify its offerings over the past few years and is moving away from what he feels is a lead diversion model, which he believes is a smart call, as he feels the lead diversion models “won’t survive.”
“Realtor.com is responding by doubling down on lead diversion and then doing PR stunts to confuse everybody,” Florance said. “It is just sort of a reality of the way the company operates and they are very aggressive in the media space.”
In the lawsuit, which was filed on Tuesday in U.S. District Court in California, Move claims that Kaminsky, who worked at Realtor.com until January before being hired at Homes.com in March, stole trade secrets to help fuel the rapid growth of Homes.com.
Move alleges that Kaminsky accessed Realtor.com documents through June of this year without being detected, despite leaving the firm in January and joining CoStar in March. According to the complaint, Kaminsky accessed information from Realtor.com “at least 37 times after CoStar hired him,” violating federal and state computer fraud laws to do so.
The documents that Move claims Kaminsky accessed include information about content planned for Realtor.com; ideas for future stories; metrics showing user traffic; a list of contacts; lists of Realtor.com employees and their compensation; and other private business information.
While the suit alleges that Kaminsky is leading a team of writers at Homes.com that are building a product similar to Realtor.com’s news and insights page, according to Florance, Kaminsky in facts edits condo listing descriptions. Prior to the filing of this lawsuit, Florance said he had never even heard of Kaminsky.
“I have never met him,” Florance said. “I talked to five or six people before I found someone who would look him up for me. I do feel really badly for this guy. He is effectively a writer and all of a sudden he is in the media for this nonsense and he’s got News Corp. after him.”
Assuming Kaminsky has in fact not done anything wrong, Florance said CoStar will support Kaminsky throughout this lawsuit.
For Florance, Move’s escalation of the feud between the two firms was not surprising given Move’s track record, which includes suing Zillow in 2014 after Errol Samuelson resigned from Move and joined Zillow on the same day. In their 2014 suit, Move alleged that Samuelson and Zillow stole trade secrets and proprietary information, and that they then made efforts to cover up the alleged theft. The two sides reached a settlement in 2016, which resulted in Zillow paying Move $130 million.
Despite similar claims, Florance believes any comparisons between the suits ends there.
“I think it is a complete mismatch,” Florance said. “We are not talking about executive officers, we are talking about a guy who is an editor on condo writing.”
Ultimately, Florance said he does not expect this lawsuit to be much of a story calling it “quite silly and a little pathetic.”
“I think it is just a messy application and a knee jerk reaction that is not terribly well through out,” Florance said. “I think it is because the “your listing your lead” model that we are doing is going to be a big program for Realtor.com. Agents prefer it hands down.”
