Online real estate listing site Zillow has agreed to purchase competitor Trulia for $3.5 billion in an all-stock deal that Zillow CEO Spencer Rascoff says will make online real estate listings more like online dating -- not by allowing you to swipe right on properties, but by running multiple brands to saturate a market in a way that attracts as much business as possible, mirroring consolidation in the online dating industry.
The deal signals his company is following a strategy similar to the one that the Barry Diller-backed InterActiveCorp, or IAC, is using in the online dating space, Rascoff told Bloomberg. IAC owns many of the largest names in the online dating scene, including Match.com, OkCupid, and the mobile app Tinder -- as well as smaller sub-brands dedicated to specific populations, like the 50-plus focused OurTime.
That diversity means it can compete for multiple different audiences and attract a larger swath of users -- and advertisers. Zillow and Trulia provide seemingly almost identical services, but could build a similar synergy: Zillow's "Zestimates," which provide a baseline for how much a property is worth, are a popular tool among home-buyers while Trulia's tools are more geared towards home sellers.
And both Zillow and Trulia have bought up smaller digital real estate start-ups to bolster their brands in the past. Trulia purchased real estate CRM maker Market Leader last year, while Zillow picked up rental and real estate search site HotPads in 2012 as well as New York regional real estate site StreetEasy in 2013.
Regional pickups like StreetEasy are a way for national sites to fight against the fragmentation of their market -- and it's arguable they might provide a better product for users, since larger conglomerates can concentrate more engineering resources and talent to refine their products. But it also shows how market forces have resulted in a more monolithic web, one that is frequently global rather than local.
This is a shift from some earlier thinking about how the Internet might develop, when some hailed it as a force that would bring a sort of radical democratization to the commercial space -- giving newcomers an opportunity to compete for a part of the pie. That did happen in some cases, with upstarts like Netflix that disrupted (and at times supplanted) older industries. But nowadays when a tech start-up gains traction, it's often a sign that a buyout is on the way.
Even if start-ups continues to operate semi-independently after being picked up, the profits of a sector then become consolidated in the hands of a few powerful players -- even if consumers feel like they have the illusion of choice as with IAC and dating sites, or, perhaps soon, Zillow and online real estate.