Zillow and Redfin Face Lawsuit Over Antitrust Allegations

On Wednesday, five states filed a lawsuit against Zillow Group and Redfin, claiming the companies conspired to hinder competition on online rental listings. This stems from a reported agreement where Zillow paid Redfin $100 million to halt its Apartment Ads.

Attorneys General from Virginia, Arizona, Connecticut, New York, and Washington have initiated antitrust suits in federal court. Notably, the Federal Trade Commission also filed a similar lawsuit just the day before.

The controversy arises from a February agreement between Zillow and Redfin, which, along with the owner of Apartments.com, CoStar, accounts for a large portion of the revenue generated from online rental ads across the U.S.

As part of this deal, Redfin allegedly agreed to withdraw from its advertising partnership with a major apartment manager for nine years, opting to showcase only those rentals listed by Zillow on its platform.

The Attorney General mentioned that this situation could adversely affect renters by driving up prices for advertisers, thereby compromising conditions and reducing competition incentives. New York Attorney General Letitia James expressed concerns that tenants could also experience cost increases.

The complaint notes that renters make up approximately 49 million units, which is over 30% of homes nationwide.

It states, “Zillow’s payment to Redfin harms renters and property owners, stripping incentives from the free market and hindering the high-quality services that consumers rely on.”

In response, Zillow and Redfin have maintained that this agreement will ultimately benefit tenants by enhancing access to property managers and advertisers, thus increasing the variety of listings available.

In defense, Redfin expressed confidence in winning the upcoming court battle.

Additionally, Rocket Companies, the parent company of Rocket Mortgage, completed a purchase of Redfin on July 1st.

Meanwhile, Zillow is also fighting a lawsuit from Compass, the largest residential real estate broker in the U.S., alleging attempts to monopolize personal housing listings.

This case has been filed in the United States District Court in Virginia, numbered 25-01647.