On Wednesday, five states filed a lawsuit against Zillow and Redfin, claiming that the two online real estate platforms breached federal antitrust laws, impacting competition in the market.
Attorneys general from Virginia, Washington, Arizona, Connecticut, and New York initiated a joint lawsuit in the U.S. District Court for the Eastern District of Virginia. The suit highlights a $100 million contract from February, in which Zillow paid Redfin to shut down its apartment rental advertising business and redirect clients to Zillow.
The lawsuit argues that this contract has significant implications. According to the complaints, Redfin has halted its multi-family advertising operations and essentially ceased competing in this area during the contract’s duration. This reduction of competition in such a concentrated market is said to adversely affect rental advertisers and those looking for a new home.
This legal action follows shortly after the Federal Trade Commission launched a similar lawsuit, accusing the February agreement of undermining competition.
In a statement, it was mentioned that any efforts to restrict Zillow’s competition could lead to higher costs for advertisers and fewer options for renters, particularly in New York, where affordable housing is already a significant challenge.
The office of the New York Attorney General noted that Zillow, Redfin, and Costar dominate about 85% of the revenue in the online apartment rental advertising sector.
Redfin has pushed back against the lawsuit’s claims, expressing confidence in its position. The company stated that its collaboration with Zillow allows users of Redfin.com to access a greater variety of rental listings, while also helping manage costs. Redfin indicated that by the end of 2024, maintaining its previous rental sales force would be economically unfeasible, and the partnership has enabled them to invest more in rental search innovations for users.
Zillow defended the agreement, asserting that it benefits both property managers and tenants by broadening access to listings across different platforms. A spokesperson emphasized that their partnership with Redfin has enhanced competition by connecting property managers with prospective tenants, thus facilitating quicker lease agreements.
