The Justice Department has asked Homestore.com, the nation's largest shelter site on the Web, and the National Association of Realtors, the nation's largest trade association, for information about its Internet business - but no allegations of wrongdoing have been leveled and Homestore CEO Stuart Wolff has distributed a memo suggesting the inquiry is virtually a "byproduct" of the company's success.

Homestore itself announced the inquiry Tuesday (April 25, 2000).

As long ago as last July the Wall Street Journal reported the Justice Department was looking into Homestore's "Gold Alliance" program with MLSs that traded pre-IPO stock warrants for exclusive listing agreements. Those exclusive listings tended to lock out competitors, such as HomeSeekers.com, HomeAdvisor.com and others. The Wall Street Journal story was refuted at the time by NAR and Homestore spokespeople.

Today, a Justice Department spokeswoman said: "We are conducting an investigation into potentially anti-competitive conduct involving the online realty listings industry."

There was some indication that Homestore competitors also had been contacted by the Justice Department but no representatives of competitors would confirm that information.

The Homestore.com corporate statement said the company had "received a request for information pertaining to our business from the antitrust division of the U.S. Department of Justice (DOJ). The request seeks information about the business of Homestore.com as it relates to Internet realty sites in the United States.

"The government has not alleged any violation of law, and the Company believes it has complied with all laws and regulations. Homestore.com intends to cooperate fully with the DOJ's request."

A statement from the 750,000-member NAR confirmed it too had been contacted by the Justice Department.

"We are entirely confident that no laws have been violated in the operation of REALTOR.com (which is owned by the NAR and operated by Homestore). Of course, we will cooperate completely with the Justice Department and we anticipate that it will reach the same conclusions," said Dennis Cronk, NAR president.

Homestore is the largest of the Internet property advertising sites with some 1.3 million listings on the REALTOR.com site. It also operates a site for the National Association of Home Builders, HomeBuilder.com, that contains about 130,000 models, new homes and built to suit plans.

Also under the Homestore umbrella is the SpringStreet.com rental site, the HomeFair.com relocation information site and a site with remodeling and home improvement information.

In his memo to "industry professionals," Homestore President Wolff clearly attempted to allay fears.

Wolff described the DOJ request as "simply a request for us to provide certain information to help the DOJ better understand our business. We have been informed that only a small number of information requests like this result in an enforcement action."

Wolff reiterated that no allegations had been made noted that, "Other category leaders such as eBay, Yahoo and Network Solutions have been asked to provide this kind of information in the past. Some might say this is a by-product of success.

"We believe that as the clear leader in our category, the competition would relish the opportunity to derail our successful business plans and attempt to usurp our position as the No. 1 visited home and real estate network on the Internet.

"It is not against the law to be No. 1, nor is it against the law to have significant market share."

Published: April 26, 2000

Use of this article without permission is a violation of federal copyright laws.