1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/5315/ftc-declares-websites-public-property/

FTC declares websites public property

July 13, 2006 by

Today the Federal Trade Commission declared that a popular Texas real estate website was de facto public property. The FTC prosecuted the Austin Board of Realtors (ABOR) because the association restricted publication of listings on its Austinhomesearch.com website. ABOR passed a rule limiting the site to “exclusive right to sell” listings. The FTC said the site should also include “exclusive agency” listings.

What’s the difference? “Right to sell” gives the realtor an exclusive right to sell the property (and earn a commission) within an agreed-upon time period. An “exclusive agency” gives a realtor the right to sell a property, but it also allows the owner to sell without the realtor’s assistance (and consequently pay the realtor a lesser or no commission.)

The FTC feels “exclusive agency” listings are better for consumers, and ABOR’s refusal to include such listings in its multiple-listings website constitutes an illegal restraint of trade. The FTC’s complaint said that “There is no cognizable and plausible efficiency justification for the Web Site Policy. The Web Site Policy is not reasonably ancillary to the legitimate and beneficial objectives of the [multiple-listing service].” In other words, the rights to free speech and assembly are protected only to the extent they aer deemed “pro-consumer” by a group of unelected antitrust lawyers.

Under the proposed order announced today, ABOR would no longer have the right to decide the content of its own website. For at least the next 10 years, the FTC will make those decisions. The FTC maintains that “important public Web sites” must be under the government’s control. This effectively means that any web site’s editorial content is subject to FTC control under the agency’s mandate to identify and punish “unfair competition”.

{ 47 comments }

Tom Rapheal July 13, 2006 at 2:04 pm

Wow, that is realy illogical. Any consumers could easily go to another site, and there are hunderds of them! If ABOR goes to the extent to collect all those listings on there web site they havea right to say how they are used. This is a barefaced power grab and should be frighting for Ebay, Google, and Amazon, “important” public sites. Also for anyone who wants quality web service as quality isn’t going to stay with govornment control. This could be used for taking over any site as importance is realative.

fancyleprachaun July 13, 2006 at 4:37 pm

Maybe the website is simply the facade the FTC drapes over its wishes to get the MLS under government control.

The MLS, or Multiple Listing Service, is the central tool real estate agencies use to list the properties for sale/rent/lease to the general real estate agency population, and in the case of austinhomesearch.com, list homes online.

From there the incentives kick in for the vast network of buyer’s agents, who screen buyers and show buyers the homes and get the paperwork started, all for a commission on the sale price.

ABOR members must pay for membership, as well as some sort of rate structure for MLS listings depending on volume and frequency, I believe.

If everyone had access to list on the MLS, or should I say, if whomever the government elite deems worthy of MLS access, those people would be able to much more quickly turn properties by simply tapping into the vast network of buyer’s agents and paying the standard commission, which is usually 3% of closing price, IIRC.

Bill, Current property owner. July 13, 2006 at 5:36 pm

Well this is hardly a shocker. There is efficiency gain restricting this website because the OWNER of the web site wants to remove efficience and increase his/her/their money from the users of it.

The FTC and all other government entities hate private property. They will come with any excuse to reduce its value or destroy it.

Look out Google, Yahoo, Ebay and Amazon, Microsoft was cut first, now a tiny realestate agency, you dudes are next.

Dan Evenson July 13, 2006 at 8:55 pm

The ABOR website is run by a non-profit. Would for-profit status have made it more difficult for the FTC to justify their ruling?

Skip Oliva July 14, 2006 at 8:29 am

“The ABOR website is run by a non-profit. Would for-profit status have made it more difficult for the FTC to justify their ruling?”

No. The FTC treats for-profit and non-profit the same.

Jim July 14, 2006 at 9:30 am

I’m torn on this one.

The realtor industry pretty much historically has done everything they can to block people from buying or selling without agents. People are sick of having to basically work with such an industry, and this is the result.

Short term profit without considering the long term result hurts everyone. For example, IBM crippled the first PC’s they sold because they didn’t want to hurt their mainframe sales.

Just give customers what they want, rather than giving them what you think they should be allowed to have, and I guarantee you that you will end up making far more money in the long run.

Curt Howland July 14, 2006 at 9:41 am

Jim, as much as I agree with your sentiment, the performance of such by government coercion is the opposite of a solution.

What would work is repealing the licensing laws on “realtors” which creates and maintains the monopoly on “lawful” property agents in the first place.

Certainly professional agents would arise without such legal restrictions, because I want someone to help out who knows what they are doing. And as you say, by just providing the service people want, they will make lots of money in the long run.

Dave July 14, 2006 at 9:59 am

The MLS and the Realtor(R) system seem to constitute a cartel and price fixing. I want to pay a “house finding expert” no more than $1,000 to connect me to the right house for me. When I sell I could see paying up to 1% for the salesmanship, marketing, and showing of the house. That is what I would pay if we weren’t in a lopsizded MLS/Realtor system. In contrast 6% of a $200,000 house is $12,000. That’s an expensive service! Think of it as giving your Realtor a new car (well, an economy car) just for selling your house. Wow! (Disclaimer: I know a few very very good Realtors–this comment does not apply to those very few people.)

RE lawyer July 14, 2006 at 10:02 am

I beg to differ with the above commenters. I am a pro-free market conservative who happens to know quite a bit about MLSs and the background to the FTC action. There is nothing new or shocking here, it is a straightforward application of settled antitrust law just as it has been applied to MLSs for decades by courts. Your beef is with the Sherman Act, not the FTC.

Understand that the MLS is an association of competitors that has a monopoly in a local market area over the database of what housing inventory is for sale. That database is jealously guarded. A commenter said consumers can just go to other websites to see homes. Not true. All those hundreds of Realtor websites you can visit to see homes are drawing their data from the MLS, pursuant to its rules of what listings they can display on their websites, and how much of each listing’s total data. That is why brokers are able to display hundreds of homes on their websites, not just the dozen or so they have listed from their own clients.

The only websites that are not drawing from the MLS data are highly inferior substitutes with only a fraction of the housing inventory: FSBO sites and new home builder sites. Trulia, Oodle, GoogleBase, Realtor.com etc. are all primarily populating their sites with listings the MLS has decided to release to the Internet, those sites crawl the Internet to obtain those MLS listings or purchase a direct feed from the MLS in the case of Realtor.com.

So you have a situation where an association of competitors effectively decides what brokers in a market are permitted to advertise their listings through the only Internet channels that consumers actually visit in large numbers. And this association decided that their broker competitors who are offering low-price, unbundled brokerage contracts to customers are going to be shut out from that critical marketing channel.

A number of MLSs tried the same thing in the 1970s and 1980s, denying low-cost brokerage models access to the joint offline marketing channels that were then critical. The DOJ shut that down in a series of court cases.

I must emphasize that I would be dismayed by this FTC action if it required an individual brokerage to display other competitors’ listings on its own website. That is not what it does. All it means is that, when all the dominant brokerages in a market agree to pool the marketing of their listings and thus create the only database that exists of housing inventory, they cannot use that market power to shut out innovative competitors who are offering a cheaper service.

Think of it this way: remember before the Internet, when newspaper classifieds were the only information about housing inventory that a consumer could acquire on his own? Imagine that all the large brokerages bought every newspaper in town and then announced that no broker could run a newspaper ad for a client’s house if the broker/client agreement was not approved by the newspaper. That is basically what the Austin MLS was doing.

ben July 14, 2006 at 10:03 am

This would result in a complete removal of the site if I “owned” it.

Scott July 14, 2006 at 10:20 am

Think of it this way: remember before the Internet, when newspaper classifieds were the only information about housing inventory that a consumer could acquire on his own? Imagine that all the large brokerages bought every newspaper in town and then announced that no broker could run a newspaper ad for a client’s house if the broker/client agreement was not approved by the newspaper. That is basically what the Austin MLS was doing.

This to me would not be a problem. Industry buys the newspaper, it controls the content. Seems reasonable to me. Think of it this way, if McDonalds buys an oversized property downtown, places a McDonalds on one quarter of the property and leaves the rest empty…should the FTC be able to force McDonalds to give the “excess” property to Burger King? That to me is a closer analogy. There is no (practical) limit to the space on the internet, so there is nothing to stop those competitors wishing to start their own website from doing that.

Tracy SAboe July 14, 2006 at 10:28 am

Did anyone notice this blog entry was on the Digg front page?

Eric July 14, 2006 at 10:32 am

Looks like a big win for consumers to me. RE Lawyer’s comments were right-on. In my (possibly uninformed) opinion, MLS pretty much has a monopoly on real-estate listings, and the ‘owners’ of MLS collude to restrict access so that it’s harder for consumers to buy/sell a home without the use of realtors. This is not at all a ‘free speech’ issue as S.M. Olivia tries to imply. This is appropriate regulatory oversight over a monopoly. Indeed, I hope that regulators do more to force MLS to make the same info available to consumers that’s available to realtors; without prohibitive fees.

Rw July 14, 2006 at 10:48 am

Scott, it’s not quite the same analogy (McDonald’s buying a lot and being forced to let BK use part of it…)

A better analogy is if McD’s bought _all_ of the lots in a given region that were zoned for fast-food stores. Then they only offered to lease the lots they owned to other fast-food stores that agreed to resell McD’s products in their stores.

MLS _owns_ the real estate database market. That’s what a monopoly is… If you don’t want to play with MLS, you won’t have a real estate business. Sure, you could set up your own database, and try to compete with MLS – but what are the odds that your competitors are going to jump away from MLS (the market owner) to join you? If they won’t join you, you won’t be able to get any data for your listing service – since home _sellers_ and _buyers_ will naturally flow to the market where they have the most opportunity (i.e., where all the other buyers/sellers are).

Yancey Ward July 14, 2006 at 10:50 am

RE Lawyer,

While I agree that the complaint should be directed at the Sherman Antitrust Act, you seem to support even this.

Eric,

It doesn’t matter whether it is a win for consumers or not. The key question is this: is it just to take the property of the realtors (the website) and force them to share with those they don’t wish to? As Scott points out, the analogy of the newspapers that RE Lawyer constructed doesn’t support the justness. Let us suppose newspapapers don’t wish to to accept ads from strip clubs, or from casinos. The same logic demands that the opening of the website would require the newpaper’s acquiesence in the other cases. And what if the realtors open the website up, but move all of their listings to a new one? Would the new listers have the right to follow?

RE Lawyer - Not! July 14, 2006 at 11:24 am

RE Lawyer’s post should answer all questions regarding the legality and justification of the FTC decision.

He’s absolutely correct, and i’m glad he’s waded in with his thoughts. Monopoly practices are bad. Period. Stop. End Sentence. Consumers benefit when there’s choice and free competition. There are huges barriers to setting up another MLS as an alternative, therefore the FTC decision is right on.

Re-read RE Lawyer’s post a second time. It may take a while to sink in…

Cheers

Steve Wolfer July 14, 2006 at 11:49 am

It’s too easy to get lost in the details of Sherman anti-trust or FCC regulation or benefits to the consumer. They are mazes of details that hide the one critical issue. When someone’s life or their property is taken from them, society’s only future protection is the law that makes that kind of act illegal. Our greatest danger comes from allowing this or that confusion, or “justification” to blind us to the consequence of allowing legalized theft.

MD July 14, 2006 at 11:58 am

I guess the extent of government interference should be determined by the extent of the monopoly.

First off, in most locations (I assume in Texas) Real Estate agents are licensed by the government – supposedly to assert quality control over the type of agent and service. So therefore, it’s an exclusive, government-restricted club. In return for the government stamp of approval, the agents should be required to abide by some basic rules. The government made the club, the government sets the rules.

In this case, I assume, the government is trying to introduce a bit of fair play and openness in how listings are displayed. They went less far than they could have; they could have mandated that anyone could list a house. It sounds like they still require it to be an agent listing.

Dan July 14, 2006 at 1:18 pm

Md

So, let’s get your position straight. Intervention of the government created the monopoly (I agree).

Therefore to fix this problem (well not fix it, but make it more “fair”) there must be even more government intervention? Intervention to alleviate problems caused by intervention?

Lawyer:

“Think of it this way: remember before the Internet, when newspaper classifieds were the only information about housing inventory that a consumer could acquire on his own? Imagine that all the large brokerages bought every newspaper in town and then announced that no broker could run a newspaper ad for a client’s house if the broker/client agreement was not approved by the newspaper.”

And that would be a problem because…? You call yourself a free-market conservative, and yet you imply that there is a seriously horrific problem with your scenario. Let me play with your scenario and then ask you few questions:

As I said, you imply that there would be a problem (prior to the internet) with every brokerage in town buying every newspaper in town and then restricting advertising access.

So, lets say that there are 6 newspapers, and the brokerages own them all. Exactly where did the brokerages do something wrong? Was the purchase of the Xth newspaper wrong? If so, then what was different between that purchase and the (X-1)th purchase? In both cases money and title changed hands voluntarily. What exactly was wrong that needs to be alleviated? In answering, remember that you are a “free market conservative” whatever that means.

Was the error not necessarily in the purchase, but the restriction of access? So, in owning X newspapers the brokerages are lawful in restricting advertising access, however if they own some number greater than X newspapers, they are may no longer morally excersize their property rights to exclusion?

Why do the newspaper owners even have to be financially interested in those they are excluding. What if Joe Schmo owns all the newspapers and decides he is going to exclude all real estate advertisments from the east side of town? What if Joe Schmo hates Target and loves Walmart, and restricts advertisments accordingly? What does a “free market conservative” think about all the above scenarios? Please don’t answer with what is lawful and unlawful. Noone gives a crap about what the law is, but rather what it ought to be. Ought there be a restriction (aggression against) in any of the cases of newspaper owners outlined above, and why is this aggression necessary?

MD July 14, 2006 at 1:44 pm

Md

So, let’s get your position straight. Intervention of the government created the monopoly (I agree).

Therefore to fix this problem (well not fix it, but make it more “fair”) there must be even more government intervention? Intervention to alleviate problems caused by intervention?

Yes and no. In an ideal world there would be no government intervention, and also no government. But, contrary to libertarian ideals, a country without government looks more like Somalia, or civil-war Lebanon, or 1900-era labour relations. Who’s got the biggest gang with the biggest guns, and whatya gonna do about it?

In this case, the government recognizes that a form of monopoly is needed (That’s a whole ‘nother debate… should we set qualifications and requirements for real estate agents? For lawyers? For doctors? For civil engineers? For manufacturers of drugs? Should an agent be knowledgable about real estate finance and law, not previously convicted of unethical practice, etc.?)

Having set up an exclusive club of real estate agents and agencies, should the government walk away or at least establish ground rules of fairness? In this case, they said that the exclusive club of licensed real estate agents had no right to arbitrarily exclude listings which could put the members of the club (not their clients!) at a financial disadvantage. Also, an agent would then pressure the client – “don’t ask for this type of perfectly legal agreement, or else all us agents won’t let you list on the master site.”

That’s monopoly collusion, it isn’t allowed under basic principles of the open market. Do you believe an open market includes the government control of monopolistic practices? Or just the practices that involve big guys with baseball bats and midnight arson? Is “you’ll never work in this town again” a legal monopolistic practice…? How about calling your friend the banker and having him call the loan of your competitor? (can happen in small towns.)

Whether the master list is a web site or a bunch of faxes and index cards, it’s the agents’ behaviour that’s being regulated.

RealEstatePhotographer July 14, 2006 at 1:46 pm

Think of it this way: remember before the Internet, when newspaper classifieds were the only information about housing inventory that a consumer could acquire on his own? Imagine that all the large brokerages bought every newspaper in town and then announced that no broker could run a newspaper ad for a client’s house if the broker/client agreement was not approved by the newspaper. That is basically what the Austin MLS was doing

I own a real estate advertising site, it’s not part of the local “MLS”, {I get more traffic} will I, as a private business owner, be required to list additional property for free?

I also work at a newspaper. We refuse advertisments all the time. I’ve attempted to advertise my real estate web site in other newspapers but I’ve been refused and called a competator. Publishers HAVE the right to control their content, print or on the web. ABOR is a privately owned company/corp/partnership and has the right to govern, right or wrong, what they publish. If it were me I’d shut down the free listings and post the FTC ruling in it’s place.

Tell me, why should people (realtors) pay to belong to a group (ABOR) and others who do not pay (realtors who are not paid ABOR memebrs) get the same benefits as those who do pay? If you are a member at Sam’s Club you get certain benefits, but as a non member, I don’t get those benefits.

(off topic, realtors really earn their money. I see it almost daily. Even the dumb, lazy ones have to know a LOT of legal to sell without getting into trouble.)

The MLS system is setup as an automated system to share information between brokers, generally, it’s a very good thing. They do not control prices. ABOR I think could shut down their public site and serve their brokers.

Dan July 14, 2006 at 2:12 pm

Md:

Why should I take the government created exclusive club as a given? This is how non-libertarians control the argument. They put people into the position of answering the wrong questions. Even conceding, only for the sake of argument, that a completely libertarian society is a utopian dream, what is so utopian about the government not requiring state licenses to do this or that? It is not a whole different question. THAT IS THE RELEVANT QUESTION.

Now, moving forward, the government intervention created the monopoly. What exactly should be done about it? The intervention ought to be repealed, period.

Why should we believe that a second (or third, or fourth) intervention, which is put in place to alleviate the problems caused by its predecessors, should be any better than those preceding?

John C. Randolph July 14, 2006 at 2:18 pm

I don’t dispute that the Realtors (TRADEMARK!) are rat bastards, but the FTC is way out of line here.

-jcr

VeGa July 14, 2006 at 3:41 pm

The one thing I think everyone can agree on, is that the Real Estate Industry is a broken, self-serving system. Anything that makes it better and gives more control to the consumer gets my praise.

Ark July 14, 2006 at 5:02 pm

Agents do not get the full comission percetage.
They usually get 1/4 (25%) of the commision.
The agents’s broker gets 1/4, the other agent get 1/4 and the other agent’s brocker get 1/4.
So out of the $12,000.00 comission, each person gets $3,000.00. Remember always divide by 4.

Big Tree July 14, 2006 at 5:34 pm

I have just read the entire group of FTC documents pertaining to this case.
There is absolutely NOTHING in any of these documents that even hints that these web sites are now “defacto public property.”
This action is aimed directly at ABOR’S practice of Monoply In Restraint Of Trade – which was outlawed by the Sherman Anti-Trust Act in the early 20th century.

Kenny MacCarthy July 15, 2006 at 2:49 pm

As a “rat bastard” agent (I feel sorry for the person that didn’t bother to interview before he/she hired), I use the internet extensively to promote my business. As a paying member, I get to display the MA MLS on my site. I do not display FSBO’s on my site as I am in business to make $$ and can’t make any by offering listings that don’t offer a commission. I resent the fact that the government could force me to display ANYTHING on my site.

Tracy SAboe July 16, 2006 at 2:19 am

Perhaps Mises should have a Digg complient link on all it’s blog entries too.

Tracy

You can Digg this thread here.
http://digg.com/tech_news/FTC_declares_websites_public_property
TS

Hello July 16, 2006 at 5:51 pm

Any “solution” proposed that involves the government (in any form) is not a solution.

PS: Has anyone actually looked at the “quality” of data and the dysfunctional array of MLS databases? An opportunity ripe for the picking…

Robert C. July 18, 2006 at 2:40 am

This is a real shame. Perhaps I shouldn’t be posting this reply, as it’s along the same lines as most other comments here, but I feel like venting this evening…

As much as I sympathize with people who are against realtors’ numerous methods of cartel building, the FTC’s way of dealing with them is entirely out of line.

First off, as far as I know, Realtors (C)(R)(TM) gain their cartel powers from laws passed within states, counties, and cities. Please correct me if I’m wrong there! If that is true, then whoever reported this case to the FTC bypassed several layers of local departments more suited to address the issue. I doubt the complainant even bothered to discuss the matter with the Austin City or even the State of Texas. It’s just not the American Way anymore.

Secondly, and this is where I’m really echoing the others, this case is one of the millions in the past (and millions to come) where officials decide that the solution is to pile more laws atop the heap of executive regulation, rather than stopping to look at the old laws and see if they had anything to do with it.

Of course, even if regulators knew that they are the cause of so much economic distortion, which undoubtedly many do, they wouldn’t dare pass up the opportunity to grab power rather than give it back to the consumer in the form of deregulation. The website in question can be said to get a good chunk of its funding from the thousands of extra dollars raked in each month from artificially-elevated house prices (which the Realtor cartels have a great deal to do with fostering by ruthlessly seeking the legislative elimination of competition in all states). A regulator sees this fact and determines that since the website is run on money gained due to supernormal profits (created by regulation), then says “Well, if it wasn’t for government, you wouldn’t have the money to run this site. Thus it’s the property of the government.”

Of course, nobody in government uses those exact words. If they did, people might stop seeking subsidies and profit-boosting regulation.

And so ends my first rant on the Mises Blog in several years of reading it!

chat February 22, 2007 at 9:16 am

Jim, as much as I agree with your sentiment, the performance of such by government coercion is the opposite of a solution.

arkadaÅŸ February 23, 2007 at 12:38 pm

Austin. Given, to effectively market your property might take some money.

Brad Dixon October 10, 2007 at 11:23 pm

It’s been over a year and is anyone feeling the burden of this ruling? I know it has long term implications but for the most part – I haven’t really noticed a difference in my day to day life.

Walt D. August 13, 2008 at 2:40 pm

Worse is on the way. The FTC wants to regulate website content under “The Fairness Doctrine”. The idea is to silence right wing talk show hosts, such as Rush Limbaugh. Does this mean that Mises.org would have to give “equal time” to Keynes, or Paul Krugman?

Las Vegas Real Estate Agent December 31, 2008 at 10:54 pm

This is very frightening. As a website owner who has spent hundreds of hours creating content for my site, taking photos and promoting it, it is unthinkable that the government could decide that your property is now “public” property and they are taking it. Somehow I don’t think the government will also step up and start paying the massive costs it takes to keep the system working.

Konya Chat January 14, 2009 at 2:20 pm

Jim, as much as I agree with your sentiment, the performance of such by government coercion is the opposite of a solution.

indir February 11, 2009 at 7:02 am

I guess the extent of government interference should be determined by the extent of the monopoly.

tül perde June 2, 2009 at 5:07 am

It bothers me that the government is attempting to hijack a system that my dues help to build and support (the database IS a huge mess, btw, and it is an opportune time for someone to come in and clean it up.) It also bothers me that, because I display IDX data on my own site, the government now has a say in what is mine.

nakliyat July 21, 2009 at 4:40 am

Perhaps Mises should have a Digg complient link on all it’s blog entries too.

David Yunker November 2, 2009 at 6:00 pm

I think everyone has lost their minds. An MLS is simply a private system set up by brokers (or on behalf of brokers) to share data and establish rules and procedures for the sharing of fees between the coopearting brokers. Nothing more nothing less. The paying membership decides the rules. If a brokers particular listing does not have an offer of cooperation with respect to fees, then there is no need for that listing to be in the MLS. Simply because this rich database can in the internet age be used to display available inventory to the public does not make it a governable utility. There are tons of other websites just for folks who don’t want to participate in the MLS.

perde modelleri November 12, 2009 at 1:05 pm

Why should I take the government created exclusive club as a given? This is how non-libertarians control the argument. They put people into the position of answering the wrong questions. Even conceding, only for the sake of argument, that a completely libertarian society is a utopian dream, what is so utopian about the government not requiring state licenses to do this or that? It is not a whole different question. THAT IS THE RELEVANT QUESTION.

karya March 5, 2011 at 7:08 am

yurtdısı eğitim, yurtdışında eğitim, yurtdısı eğitimi, yurt dışı egitim, dil okulu,
work and travel, yüksek lisans, yurtdışı üniversite, dil okulları, yaz okulları,
vize danışmanlık, ankara yurtdışı eğitim, ankarada yurtdışı eğitim, istanbul yurtdışı
eğitim, firmaları, yurtdışı eğitim danışmanlığı firmaları

video May 6, 2011 at 2:04 am

video video video video video video video

Perde August 14, 2011 at 8:44 am

good site, good article

gazete October 7, 2011 at 2:12 am

gazete

Gazeteler November 15, 2011 at 3:18 am

Güncel gazete başlıkları.

Oyun Gemisi November 15, 2011 at 3:19 am

oyun

Comments on this entry are closed.

Previous post:

Next post: