Zillow Group, Inc. (NASDAQ: ZG) saw its shares drop 11% on yesterday, following reports of Google testing property listings directly in search results. The stock clawed back about half those losses in trading since the report surfaced, but the initial plunge highlights investor concerns over Google’s potential to disrupt online real estate portals. This move puts pressure on Zillow’s core model, which depends heavily on traffic from home searches to generate agent leads.
Zillow pulls in most revenue from premier agent advertising, where real estate agents pay for prominent placement on property listings. Residential revenue reached $655 million in Q2 2025, up 15% year over year, with these fees making up the largest share. Rentals and mortgages contribute, but listings drive the traffic that fuels agent connections. If Google displays full property details in search, users might skip Zillow altogether, starving the lead generation machine.
Google began testing richer property cards in search late last year, partnering with firms like ComeHome and HouseCanary. These show photos, prices, sizes, and agent info without leaving the search page. It evolves from basic snippets into something closer to a listings hub. With billions of home searches yearly, a full rollout could capture intent right at the source, sidelining specialized sites.
Realtor.com, operated by News Corp (NASDAQ: NWSA), uses a similar agent ad approach and saw shares fall 3% on the news. CoStar Group (NASDAQ: CSGP), behind Homes.com, relies on listing subscriptions and faces the same traffic risks. Redfin Corporation (NASDAQ: RDFN) blends brokerage with portals, dropping 4.5% as its services overlap Zillow’s. Google holds 90% search market share, amplifying the threat across the board.
Zillow can lean into tools like ShowingTime Plus for tour scheduling and offer verification, building agent loyalty beyond basic views. Reviving cash offer programs or adding AI valuations might pull users deeper into the app. Stronger lender ties for mortgages could complete transactions Google cannot. Owning more data via Zillow Offers cuts reliance on feeds Google accesses.
Zillow boasts 250 million monthly users, yet Google’s audience towers over it. Agent revenue grew 13% last quarter amid high rates, proving resilience. A 10-20% traffic shift to Google might trim margins from 25% to under 20% in a year. Rivals like Realtor.com add video, Redfin cuts commissions. Rentals at 25% of revenue provide a cushion.
Google’s test stays small for now, yet the reaction shows real stakes. Zillow and others need to shift from traffic gates to end-to-end services as search changes.
