Free-market competition is, and always has been, the great driver of optimal outcomes for consumers. Judge Robert Bork argued for a consumer welfare standard to examine business behavior in his book “The Antitrust Paradox.” Bork argues that antitrust regulators should focus on the impact that corporate behavior is having on consumers rather than protecting obsolete business models.
Recently, Rep. Ben Cline urged the Federal Trade Commission to investigate online real estate platforms for alleged misconduct that harms homebuyers. His letter outlines the kind of action that consumers and conservatives should rally around.
Cline asks regulators to consider two areas of concern in the online real estate market: First, deceptive referral tools that direct buyers to affiliated agents, and, second, financing options that steer buyers toward lenders that pay the platforms a kickback. I agree with Cline that we should be wary of companies becoming so dominant that consumer welfare is harmed.
Without naming names, Cline’s letter draws attention to Zillow, the largest online real estate broker. The platform’s “contact agent” feature, the letter notes, connects users with agents who pay Zillow, rather than the selling agent, for priority status. This online feature increases commission fees for buyers.
Likewise, the site allegedly encourages agents to push buyers to its mortgage lending division, in return for a steady stream of leads. Zillow does not charge agents for the leads but does take a cut of commissions that result from them — as much as 40%, according to another lawsuit filed against the real estate leader late last year.