FTC Sues Zillow and Redfin Over Alleged Rental Market Conspiracy
The Federal Trade Commission (FTC) has filed a lawsuit against Zillow and Redfin, accusing the companies of illegally conspiring to reduce competition in the online multifamily rental listing market. The agency announced the suit Tuesday, alleging a violation of federal antitrust laws.
At the heart of the complaint is a $100 million payment zillow made to Redfin earlier this year. The FTC contends this payment was made with the intention of Redfin re-hosting Zillow’s multifamily rental listings on its platforms – including Redfin.com and Rent.com – effectively diminishing Redfin’s role as an independent competitor.
According to the FTC,the agreement involved Redfin terminating contracts with its existing advertising customers and assisting Zillow in acquiring that business.Furthermore, Redfin allegedly committed to limiting its involvement in the multifamily advertising market for up to nine years, essentially becoming a platform for Zillow’s listings.
The FTC also alleges that following the deal,Redfin laid off hundreds of employees and then facilitated Zillow’s selective rehiring of many of them.
“Paying off a competitor to stop competing against you is a violation of federal antitrust laws,” stated Daniel Guarnera, director of the FTC’s bureau of competition. “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.”
The lawsuit seeks to dismantle the agreement between Zillow and Redfin and may require divestitures or restructuring to restore competition within the rental advertising market.
Following the FTC’s announcement, shares of both Zillow and Redfin’s parent company, Rocket Companies, experienced a decline in trading.
Zillow defended the partnership, stating in a release that the listing syndication with Redfin “benefits both renters and property managers and has expanded renters’ access to multifamily listings across multiple platforms.” The company maintains the arrangement is “pro-competitive and pro-consumer.”
Redfin also disputed the FTC’s allegations, asserting that the partnership has ”given redfin.com visitors access to more rental listings and our advertising customers access to more renters.” The company stated that declining advertising customer numbers made maintaining a dedicated sales force unsustainable, and the partnership with Zillow allowed for investment in rental-search innovations on Redfin.com.
