The Federal Trade Commission is suing Zillow and Redfin for allegedly conspiring to eliminate competition for rental housing listings.

In a lawsuit filed Tuesday in the United States District Court for the Eastern District of Virginia, the FTC claims the real estate giants violated federal antitrust laws by entering into an illegal agreement to dismantle Redfin as a competitor.

Both companies are headquartered in Seattle and are major players in the online rental listing market. Redfin, now owned by Rocket Companies, operates Rent.com, Rentals.com and ApartmentGuide.com.

In February, the two companies announced a $100 million deal for Zillow to become the exclusive provider of multifamily rental listings on Redfin.

At the time, Zillow touted the agreement as a partnership giving renters access to a larger pool of available apartments. But the FTC sees it as an effort to eliminate competition.

The FTC lawsuit seeks to dismantle the agreement between Zillow and Redfin and potentially divest assets or reconstruct the businesses to restore competition.

In separate statements, Zillow and Redfin denied the FTC allegations.

In its press release, the FTC said it worked in close collaboration with the offices of several state attorneys general throughout the investigation.

The FTC alleges Zillow paid Redfin $100 million in February to stop selling multifamily advertising, terminate existing multifamily advertising contracts and transition those customers to Zillow. Redfin agreed to stop competing in the advertising market for multifamily properties for up to nine years and serve as an exclusive syndicator of Zillow listings, the FTC claims.

This made “Redfin sites effectively a copy of the listings that appear on Zillow’s sites,” the FTC said, and will likely lead to higher prices and worse terms for apartment advertising.

Redfin fired hundreds of employees as part of the agreement and then helped Zillow to hire its pick of those terminated workers, the FTC alleges.

“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, in the press release. “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.”

In a statement, Zillow spokesperson Chrissy Roebuck said Tuesday Zillow remains confident in its partnership with Redfin.

“Our listing syndication with Redfin benefits both renters and property managers and has expanded renters’ access to multifamily listings across multiple platforms,” Roebuck 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.”

Redfin strongly disagrees with the FTC’s allegations, a spokesperson said in a statement, and is confident it will be vindicated by a court of law. Partnering with Zillow has given Redfin.com visitors access to more rental listings and its advertising customers access to more renters, the spokesperson said.

“By the end of 2024, it was clear that the existing number of Redfin advertising customers couldn’t justify the cost of maintaining our rentals sales force. Partnering with Zillow cut those costs and enabled us to invest more in rental-search innovations on Redfin.com, directly benefiting apartment seekers,” the Redfin spokesperson said.

Matthew Gardner, a Seattle-based real estate economist, said he sees both sides.

“(The FTC) thinks it's suppressing competition, but on the other hand, you could argue it's a pro-competitive partnership,” he said.

Either way, he doesn’t believe the agreement between the companies has a direct impact on renters — only those that advertise to them.

Still, Gardner is interested to see how the mortgage giant Rocket Companies, which purchased Redfin in July, will react to the lawsuit. Its stocks, along with Zillow’s, dipped this afternoon shortly after the FTC announced the lawsuit.

“I think… this surely is going to be something the board of Rocket Mortgage is looking at very closely,” Gardner said.

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