FTC Sues Zillowโ and Redfin Over Allegedโค Rental Market Conspiracy
The Federal Trade Commission (FTC) has filed a lawsuit against Zillowโฃ and Redfin, accusing the โคcompanies of illegally conspiring to reduce competition in the online multifamily rentalโข listing market. The agency announced the suit Tuesday, โคalleging a violation โขof federalโ antitrust โlaws.
At the heart of theโ complaint isโ aโ $100 โmillionโข payment zillow made to Redfin earlier this year. The FTCโ contends this payment was โคmade with the intention of Redfin re-hosting โฃZillow’s multifamily rental listings on its platforms – including Redfin.com and Rent.com – effectively โฃdiminishing Redfin’sโฃ role as โan independent competitor.
According to โคthe FTC,the agreement involved Redfin terminating contracts with its existing advertising customers and assisting Zillow โin acquiring that business.Furthermore,โ Redfin โallegedly โขcommitted โคto โlimiting its involvement in the multifamily advertising โmarket for up โto nine years, essentially becoming โขa โคplatform for Zillow’s listings.
The FTC also alleges that following the โขdeal,Redfin laid off hundreds of employees and then facilitated Zillow’s selective rehiring ofโ manyโ of them.
“Paying off a competitor to stop competing against you is a violation of federalโข antitrustโค laws,” statedโข Daniel Guarnera, โขdirectorโ ofโฃ the FTC’s bureau of competition. “Zillow paid millions of dollars to eliminate โฃRedfin as an independent competitor in an already concentrated advertising market-one that’s critical for renters, property managers, and the health of โคthe overall U.S. housing โmarket.”
The lawsuit โคseeks to dismantle the agreement between Zillow and Redfin and mayโข require divestitures or restructuring toโ restore competition โwithin the rentalโ advertising market.
Following the FTC’sโ announcement, shares of both โZillow and Redfin’s โparent company, Rocket Companies, experiencedโข a decline in trading.
Zillow defended โคtheโข partnership, stating in a release that the listing syndication withโ Redfin “benefits both renters and property managers and โขhas expanded renters’ access โto multifamily listings across multiple platforms.” Theโ company maintains the arrangement is “pro-competitive and pro-consumer.”
Redfin โalso disputed the FTC’s allegations, asserting that the partnership has โ”given redfin.com visitors access to โขmore rental listings and our advertising customers access to more renters.” The company โคstated that declining advertising customer โnumbers made maintaining a dedicated sales force unsustainable,โ and the partnership with Zillow allowed forโค investment in rental-search โฃinnovations on Redfin.com.