The U.S. Federal Trade Commission (FTC) filed an antitrust lawsuit against real estate platforms giants Zillow and Redfin on October 1st, accusing the two companies of reaching an agreement in February this year that allegedly involved “paying off” to eliminate market competition, severely harming the rental advertising market and consumer rights.
The FTC’s complaint alleges that Zillow paid Redfin $100 million and other compensations in exchange for Redfin’s exit from the “multi-unit residential” (25 units and above) rental advertising market in the next 9 years, termination of advertising contracts with clients, and assisting Zillow in taking over the business. According to the agreement, Redfin would only serve as Zillow’s exclusive “property listing redistribution platform,” making its website content almost a replica of Zillow’s.
This action led to Redfin laying off hundreds of employees, some of whom were subsequently selected and employed by Zillow. The FTC stated that the two companies described the agreement to the public as a “partnership” while in reality, it was an acquisition that circumvented market competition, violating the Clayton Act and federal antitrust laws.
FTC Bureau of Competition Director Daniel Guarnera said, “Paying hefty sums to competitors to exit the market is blatantly illegal anticompetitive conduct. Such agreements not only stifle competition but also drive up advertising prices, undermine the incentive for platform innovation and service improvement, ultimately harming both renters and property management entities.”
According to the complaint, the agreement could result in rental advertising price increases, deteriorating conditions, and a lack of incentive for Zillow and Redfin to invest in innovation and enhance the renting experience for tenants.
Currently, the rental advertising market in the United States is highly concentrated, with Zillow and its subsidiaries (such as Trulia, HotPads, StreetEasy, etc.) holding a dominant market share, with the only major competitor being CoStar, the parent company of Apartments.com, which is significantly smaller in scale.
The FTC is requesting the court to stop Zillow and Redfin from continuing to enforce the agreement and may require asset divestiture or business restructuring to restore market competition. The case has been submitted to the United States District Court for the Eastern District of Virginia for trial.
This case not only concerns the housing choices of millions of American renters but also serves as a significant milestone in online rental housing platforms’ antitrust supervision.