FTC sues Zillow and Redfin over deal it accuses of supressing competition in rental ads

The U.S. Federal Trade Commission is suing Zillow and Redfin, accusing the real estate companies of entering what the regulator says is an illegal deal to suppress competition in online rental advertising.

In a lawsuit filed on Tuesday, the FTC alleges that this agreement started in February — when Zillow paid Redfin $100 million. In exchange for that and other compensation, the commission said, Redfin agreed to end contracts with advertising partners, stop competing ads for multifamily properties for up to nine years and serve as a syndicator of Zillow listings on its own sites.

Redfin also fired hundreds of employees shortly after the announcement of this plan, Tuesday’s complaint notes, alleging that the company also helped Zillow hire “its pick” of these workers.

“Zillow paid millions of dollars to eliminate Redfin as an independent competitor in an already concentrated advertising market — one that’s critical for renters, property managers, and the health of the overall U.S. housing market,” Daniel Guarnera, director of the FTC’s Bureau of Competition, said in a statement Tuesday.

Guarnera added that Zillow and Redfin’s actions were a violation of federal antitrust laws. The Commission argues that the companies’ “unlawful scheme” maybe reduce incentives for further competition, and could lead to higher prices and fewer choices for multifamily rental advertising customers.

In a statement, a Zillow spokesperson maintained that its “listing syndication with Redfin benefits both renters and property managers” — adding that it had “expanded renters’ access to multifamily listings.” The Seattle-based company said the agreement was “pro-competitive and pro-consumer.”

A spokesperson for Redfin, which was acquired by Detroit-based mortgage giant Rocket Companies earlier this year, added that the company “strongly disagrees with the FTC’s allegations” and was confident about prevailing in court. Redfin reiterated the Zillow partnership had given its users access to more rental listings and advertising customers access to more renters — noting that by the end of 2024, the company had determined that its own number of advertising customers “couldn’t justify the cost of maintaining our rentals sales force.”

The FTC still maintains that the agreement isn’t the partnership Redfin and Zillow say it is. The Commission, which authorized filing Tuesday’s complaint in a 3-0 vote, is seeking to get the companies to end this deal, in addition to other relief from the court — such as potential divestiture of assets or business reconstruction “to restore the competition.”