In an exclusive interview with RISMedia on July 5, CoStar Group CEO Andy Florance lambasted the new lawsuit filed by Realtor.com parent Move, Inc. that claimed a former Move employee, now working for Homes.com parent CoStar, stole proprietary information from his former employer, labeling it a desperate attempt for attention and attributing it to one of Move parent News Corpās typical strategies to intimidate a low-level employee and bully the media.
As previously reported, Move wrote in its complaint that James Kaminsky, āa former Move employee now working for Moveās direct competitor, CoStar, systematically invaded Moveās secure computer systems, secretly exfiltrated Moveās trade secrets, and spied on Moveās real-time confidential electronic documents to give CoStar a massive unfair competitive advantage and to help CoStar increase traffic to its competing real estate listing website, all to the detriment of Move.ā
Floranceās basic retort? Hogwash, and a shameful way to try to divert attention from what he called Realtor.comās failing business model, as the residential real estate portal giants vie for second place behind Zillow.
Contacted by RISMedia to see if they would provide further details, a Realtor.com spokesperson emailed, āWe donāt comment on pending litigation. The court documents speak for themselves.āĀ
But Florance had plenty to say.
āI learned about this in the media and had no idea who the employee involved was,ā he said. āWe have 7,000 employees. This is a relatively junior employee writing descriptions of condominium buildings in New York City. He had no contact with any senior leadership of the company. So why in the world is this poor guy (being used as) a pawn? Doesnāt he have a right to a job? Clearly editing condo descriptions is not in any way sensitive intellectual property. Itās ridiculous.
āSo what is this? It’s a sick, twisted PR stunt, and it’s using this guy as a pawn. Realtor.com has no affiliation with the National Association of REALTORSā” (NAR). It is part of News Corp, which is controlled by the Murdochs. They’re pretty aggressive people and they have a reputation for that. Why are they doing something like this? The answer is clear.
āBasically, their business is in trouble for a couple of reasons. One is they’ve clearly lost the traffic battle. We have 156 million (monthly views) in the Homes network, and they have 72 million. So we have 84 million more. So it’s tough to hold on to the concept that you’re the number two player when you’re clearly not, and you’re fighting to not fall to number four.
āThe second major thing is their business model, which I believe is fatally flawed. It was working for a while, but it won’t keep working. Their business model is lead diversion, taking the legitimate leads from agents’ listings and selling them to another agent. Agents hate that business model and buyers and sellers hate that business model, but Realtor.com has gotten a pass for it.ā
Getting back to the lawsuit, Florance mocked it, claiming there would be no trial.
āThis has nothing to do with a trial,ā he insisted. āThe only thing is for you and other folks in the media to write articles about it. Theyāre basically trying to sling mud at CoStar Group’s credibility or integrity, trying to imply that we did something wrong, which is ridiculous. There’s no lawsuit here. There will be no trial.ā
Florance said Realtor.com basically has two ways to go about trying to move forward.
āOne is to change their business model and the other is to try to fire flack and confuse everybody,ā he said. āJust like they divert leads, this is trying to divert attention away from their business model, which is anti agent.ā
Asked what he would say to Move CEO Damian Eales, Florance was to the point.
āI’d probably just say, ‘hey, don’t drag some poor guy, some junior employee into a pawn situation like this.’ Itās ridiculous.ā
Florance said he sees through Moveās decision to put the lawsuit in the news just before the Fourth of July national holiday, when most people are not working.
āThey throw stuff out there and hope that we don’t respond to it,ā he said. āThatās one of the reasons they did this on Wednesday, July 3 (the lawsuit was technically filed on July 2). It was intentional so that they could have it sitting out there for days and days and days without a response. Remember, we’re dealing with News Corp, which knows how to work the media. They purposely filed it right before July 4, hoping that (VP-Marketing Communications) Matt Blocher and Andy Florance and (CoStar General Counsel) Gene Boxer are taking the weekend off and that the thing will settle and gel.ā
RISMedia also spoke at length with Boxer, who provided in-depth background information.
While the 32-page Pleading Template included all kinds of allegations, Boxer said CoStar would ālook forward to prevailing in court,ā if it did indeed come to that.
āWe obviously did not poach the guy (Kaminsky),ā he says. āHe was serving as a senior editorial director at Realtor.com, and left in January, 2024. We did not employ him until March of 2024.
There is no non-compete. We didn’t target him, we didn’t solicit him. And ultimately he got hired into a job that is very different from the job that he had.Ā
āBut the idea that even the concept that he had anything to do with our strategy makes no sense. And the reason is he reports to someone who reports to someone who reports to someone who is our senior vice president of content. The leadership team is based in Richmond. The content strategies are developed in Richmond. James leads a team in New York that focuses on condo content there. So the concept that somehow he’s involved with the content strategy, development of strategy or implementation of strategy for Homes.com is an entirely false narrative. The content and our strategy was developed years ago. It’s been executed under someone who is two levels above where James is in the organization. So objectively, this is just false.ā
Boxer said he has not yet spoken to Kaminsky but āpeople on my team will set up a time to speak with him.āĀ
What information Kaminsky is accused of taking was also something that Boxer questioned. Kaminsky was in an editorial role at Move, both sides agree.
āSo think about his title and think about what he possibly could have taken that is of any strategic relevance to our monetization strategy when he doesn’t have a role, nor does he report to someone who has a role, in developing that strategy for us,ā says Boxer. āYou’re talking about someone who at the end of the day did news and media for them. What he does for us is not news and media. What he is doing for us is content about condos in New York. It is unrelated. There’s nothing that he could have possibly taken that is of any consequence to us in his current role. He was not hired to do anything that was even relevant to what he did before.ā
Boxer agreed with Florance in believing that Moveās true intent for the lawsuit is to shift attention away from how well Homes.com has been doing, trying to get it focused in a negative light on the company.
āI’m the general counsel of the company, and the way I think about it is, what is the monetary damage they can possibly get from us when we didn’t poach him, we hired him months after he left and we put him in a position that is entirely different than the position he had while he was there,ā he says. āThe guy works in New York and is leading a team to build out content in New York. There’s no monetary value to that. The reason they did this and the reason it was leaked to every media outlet is because this is a PR stunt.ā
Boxer was asked if Kaminsky would have to testify if there was a trial.
āI don’t know if it will go to trial because if I was them I’d probably let this thing go, because once you get past the news cycle, it’s sort of not valuable. But if it does, we’re going to defend ourselves rigorously.ā
Is Boxer concerned about the time and cost of having to do research and interviews before a trial, and to have to dig into emails, computer files and such?
āThis is like the pimple on the elephant of my litigation (duties),ā he relied. āYou can quote me on that, too. Literally, it’s not even something I’m going to think about. We’re going to complete our inquiry and then seek a motion to dismiss.ā
Moveās legal complaint includes that Kaminsky, when he no longer worked there, accessed computer files 37 times to use at CoStar. Without even addressing whether it could be true or not, Boxer put the blame squarely on Realtor.com.
āIn our company and in most companies, particularly public companies, the day that you are a former employee there’s a policy in place that, from a technology perspective, basically bars you from having access,ā he says. āSo maybe they’re admitting that they have an internal control failure that could be a real problem for them, if a former employee can access their files months after (leaving). We do not have any insight of what may have happened. It sounds far-fetched, and certainly sounds like a control failure for them.ā
Ultimately, the company believes Realtor.com is being reactive to the following metrics CoStar has been reporting, as well as its intended business model:
- Homes.com traffic based (March 2024) on Google Analytics is 156 million unique monthly visitors to the Homes.com network (110 million unique monthly visitors to just Homes.com) and is significantly above Realtor.comās 72 million unique monthly visitors.Ā Ā
- Realtor.com is trying to redefine Homes.comās Your Listing, Your Lead model that Homes.com says benefits all agents. CoStar feels that Realtor.comās business model is flawed and works against agents by selling leads, also works against sellers and is not good for the homebuyer.
