state Attorneys General Sue Zillow and Redfin Over Alleged Rental Market Scheme
New York, Arizona, Connecticut, Washington, and Virginia Attorneys General have jointly filed a lawsuit against Zillow and Redfin, accusing the companies of anti-competitive practices in the online housing rental market. The lawsuit stems from a February agreement where zillow reportedly paid Redfin $100 million to discontinue its apartment rental advertising business and transfer its clients to Zillow.
According to a news release from New York Attorney General Letitia james’ office, the agreement was “an end run around competition” designed to shield Zillow from direct competition with Redfin for multifamily building advertising customers. the suit alleges violations of federal antitrust laws and potential harm to renters through reduced options and potentially increased advertising costs. It further claims Redfin laid off employees and then collaborated with Zillow to rehire some of them.
The Attorneys General are seeking an injunction to halt the alleged scheme and are proposing a potential restructuring of the businesses to foster competition.
Zillow and Redfin, along with CoStar (owner of Apartments.com), collectively control 85% of the market revenue in the online rental listing space, according to James’ office.
Redfin maintains its innocence, stating in a statement that the partnership with Zillow has broadened access to rental listings for visitors to Redfin.com and increased renter reach for advertising customers. The company explained that by the end of 2024, maintaining its rental sales force was no longer financially viable and the partnership allowed for investment in rental-search innovations on its website.
Zillow also defended the partnership, asserting it is “pro-competitive and pro-consumer” by connecting property managers with more potential renters.
Following the announcement, shares of Zillow and Redfin’s parent company, Rocket companies, initially declined in trading, continuing a downward trend that began Tuesday after the Federal Trade commission (FTC) filed a similar lawsuit alleging an antitrust violation. Both Zillow and Redfin have disputed the FTC’s allegations and reaffirmed their confidence in the partnership.
