Federal Trade Commission targets $100 million tie up
The Federal Trade Commission has slapped both Zillow and Redfin with a lawsuit alleging that a $100 million agreement between the companies illegally blunted competition in the already concentrated market for online rental advertising. The complaint, filed in federal court in Virginia, accuses the two real estate firms of arranging for Redfin to step aside as a direct competitor in multifamily rental listings and instead serve as a distribution outlet for Zillow’s ads.
At the heart of the case is a deal announced in February, in which Zillow agreed to pay Redfin to carry Zillow’s rental listings across Redfin.com and its subsidiaries Rent.com and ApartmentGuide.com. Regulators contend that the agreement not only made Zillow the exclusive provider of multifamily rental advertising on those platforms but also bound Redfin to exit the business altogether for up to nine years.
According to the FTC’s filing, Redfin ended its advertising contracts, turned over customer information, and transferred hundreds of employees to Zillow as part of the arrangement. The agency says this effectively turned Redfin’s rental portals into replicas of Zillow’s listings and deprived property managers and landlords of a once-vital advertising alternative.
“Paying off a competitor to stop competing against you is a violation of federal antitrust laws,” said 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.”
Investors reacted swiftly. Shares of Zillow fell nearly 4 percent on Tuesday, while Rocket Companies, Redfin’s parent, slid about 5 percent. The losses reflected unease not only over potential legal remedies—which could include divestitures or restructuring—but also over the broader regulatory appetite for policing online platforms that serve as gateways to the housing market.
Zillow defended the syndication deal as beneficial for both sides of the rental market. “Our listing syndication with Redfin benefits both renters and property managers and has expanded renters’ access to multifamily listings across multiple platforms,” a company spokesperson said. “It is pro-competitive and pro-consumer by connecting property managers to more high-intent renters so they can fill their vacancies and more renters can get home. We remain confident in this partnership and the enhanced value it has delivered and will continue to deliver to consumers.”
Redfin did not immediately comment.
A Consolidated Market
For regulators, the case highlights the increasing consolidation of internet listing services, which play a central role in how Americans search for rental housing. Zillow, Redfin and CoStar’s Apartments.com dominate the digital marketplace, with Zillow drawing more than 250 million visits monthly and Redfin attracting about 95 million. By contrast, Rent.com and ApartmentGuide.com register only a fraction of that traffic, generally in the low single-digit millions.
The FTC argues that eliminating Redfin as an independent rival in this landscape could mean higher advertising costs for property managers, diminished visibility for landlords seeking tenants, and fewer options for renters.
Implications for Housing Finance
For mortgage and housing finance professionals, the lawsuit underscores the regulatory scrutiny now being directed at online housing platforms. While mortgage originators are not directly affected by multifamily rental advertising, the structure of these markets influences the visibility of new developments, the absorption of rental units, and broader perceptions of housing supply—all of which inform credit demand and property valuations.
Should the FTC succeed in unwinding the Zillow–Redfin pact, multifamily property managers may once again have competing channels for digital marketing. If it fails, Zillow’s position in the rental listings business could become even more entrenched, reinforcing the trend toward concentration in the broader housing services ecosystem.
