Letitia James, others wade in as Rocket builds what some see as a monopoly
Attorneys general from five states have waded in to join the Federal Trade Commission’s sweeping legal offensive against Zillow and Redfin, alleging that a $100 million pact between the two online real estate firms was designed to suppress competition in the rental advertising market.
The twin complaints, filed this week in federal court in Virginia, target a February 2025 agreement in which Redfin accepted payment to withdraw from the multifamily property advertising business for nearly a decade. Under the arrangement, Redfin shuttered its rental ad unit, laid off more than 400 staff members, and transferred both customers and employees to Zillow. Redfin’s rental portals - including Rent.com - were retooled to carry only Zillow’s listings.
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Regulators allege that the companies attempted to disguise what amounted to a buy-off as a “partnership.” In the government’s telling, it was instead a textbook violation of federal antitrust laws. “The wholesale elimination of critical competition in this highly concentrated space will harm rental advertisers and the Americans who rely on ILSs to find their next home,” the FTC asserted in its complaint.
A concentrated market under pressure
Zillow, Redfin, and CoStar’s Apartments.com collectively control more than 80 percent of the online apartment advertising market, making any reduction in head-to-head rivalry consequential. With Redfin stepping aside, the FTC argues, landlords and property managers face diminished bargaining power, likely higher ad rates, and fewer ways to reach tenants. Renters, meanwhile, would be left with fewer options for discovering available housing.
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State leaders echoed those concerns. “We can’t just sit by and allow costs to go up and up and up,” Arizona Attorney General Kris Mayes said. New York Attorney General Letitia James warned that “Zillow’s attempt to shut down its competition could drive up costs for advertisers and leave renters with fewer options when searching for a new apartment.”
Market and investor fallout
The enforcement action rattled markets. Zillow’s shares dropped nearly 4 percent on the day of the filing, while Rocket Companies, Redfin’s parent, fell about 5 percent. Rocket Companies continued their slide today to $17.66 at 12.28pm ET, a sudden drop from its September 30 mark of $20.19. The declines signaled investor unease not only over potential remedies—such as divestitures or forced unwinding of the agreement—but also over the broader regulatory climate confronting online platforms central to the housing market.
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Zillow has defended the syndication deal as a consumer benefit. “Our listing syndication with Redfin benefits both renters and property managers and has expanded renters’ access to multifamily listings across multiple platforms,” a spokesperson said. “It is pro-competitive and pro-consumer by connecting property managers to more high-intent renters.” Redfin has separately insisted it acted prudently by offloading an unprofitable line of business and reinvesting in technology for its core platform.
Rocket’s Expanding Ambitions
The litigation comes as Rocket Companies is deepening its footprint across real estate and mortgage services. On October 1, Rocket closed its $14.2 billion acquisition of Mr. Cooper, the nation’s largest mortgage servicer, in an all-stock transaction that swelled in value as shares climbed since March. The move follows Rocket’s summer purchase of Redfin, adding a consumer-facing search and brokerage platform to its growing empire.
Jay Bray, Mr. Cooper’s longtime chief executive, is now president and CEO of Rocket Mortgage, while also taking a seat on Rocket’s board. Rocket has forecast $400 million in annual cost savings from the combined operations. Chief executive Varun Krishna said the integration of origination, servicing, and property search “paves the path for Americans to own the dream.”
For mortgage professionals, these developments illustrate both opportunity and risk. On one hand, Rocket is consolidating its position as a one-stop shop spanning search, origination, and servicing. On the other, the FTC’s scrutiny of Zillow and Redfin underscores regulators’ growing willingness to police consolidation and alliances that shape the housing services ecosystem.
Implications for the Mortgage Sector
While the litigation focuses narrowly on rental advertising, the ripple effects could extend to mortgage demand, property valuations, and perceptions of housing supply. If competition in rental listings is restored, landlords may gain more marketing channels, potentially easing absorption of new multifamily units. If Zillow’s dominance is cemented, higher advertising costs could ripple through development budgets and, in turn, financing decisions.
The disputes also highlight a broader convergence: online platforms once confined to listings or lead generation are increasingly intertwined with the credit and servicing side of the market. For lenders, brokers, and mortgage investors, the outcome of the FTC’s case may prove a bellwether for how regulators respond to concentrated power in digital real estate services.
