This post was originally written on the Home Value Leads blog entitled "Zillow Trulia Merger? I'm Not Worried..." This article has been updated to reflect the official merger announcment which does change the point of this article at all.
Rumors have exploded once again surrounding Trulia. Just over a month ago, there was rumor of a potential Trulia Move, Inc merger which has never come to pass. This time the rumor involves Zillow buying Trulia according to multiple sources such as CNBC and Bloomberg. [Update: Zillow and Trulia have officially announced their intentions to merge. Read the announcement here.] Let me explain to you why I'm not worried about a Zillow Trulia merger.
The Zillow Trulia merger is not a surprise to anyone who knows the stocks of these companies well. There are a few major players who own large chunks of both companies, making approval from the stockholders almost guaranteed. There is another approval, however, that is needed even more - the FTC, which won't be nearly as easy to secure.
For those of you not familiar with business mergers of publicly traded companies, the Federal Trade Commission, or FTC, is charged with protecting both the consumer and protecting competition. The FTC is who stepped in and fined companies like Google and Microsoft, and the ones who stepped in to stop the merger between AT&T and T-Mobile, citing competition concerns. They have some pretty wide reaching powers and they use those to protect the consumer. In this case, the consumer would be the general public who consumes the information as well as real estate agents and brokerages who pay the majority of the bills At Zillow and Trulia.
A report from Inman News on real estate traffic shows that Zillow and Trulia combined for 79.6 million total visits, or just over 25% of all real estate website traffic. While 25% is a large number, it wouldn't normally phase the FTC or prevent them from approving the Zillow Trulia merger. However, when you look at the rest of this list, you will notice that many of the names in the top 20 are actually fed through Zillow or Trulia. According to ComScore, these 2 sites make up approximately 89% of all traffic to the 15 most visited real estate websites. This is the point where the FTC should start taking a hard look at the Zillow Trulia merger and say "whoa." When a single company would control nearly 90% of all real estate traffic in the United States, there should be concerns. Heck, they even blocked a PREZEL merger.
It will be very interesting to see how the Zillow Trulia merger proceeds and what information they present to defend such a monopoly of power. Once the FTC steps in, they will have a public comment period where you can voice your approval or disapproval of such a merger. We will let you know when that happens. Until then, please feel free to voice your opinions below!
Photo credit: Inman.com and Experian Marketing Services