In a significant legal action targeting two of America’s largest real estate platforms, five state attorneys general have joined the Federal Trade Commission in suing Zillow and Redfin over allegations that the companies struck an illegal $100 million deal to eliminate market competition in the rental housing advertising sector. The coordinated lawsuits represent one of the most substantial antitrust actions in the real estate technology industry and could have far-reaching implications for how online property platforms operate.
The Federal Case: FTC’s Core Allegations
The Federal Trade Commission sued Zillow and Redfin over an unlawful agreement that eliminates Redfin as a competitor in the market for placing advertising of rental housing on internet listing services (ILSs), the websites that millions of Americans use to find their next rental home. The FTC’s complaint, filed in the U.S. District Court for the Eastern District of Virginia, alleges that the agreement fundamentally undermines competition in a critical sector of the housing market.
According to the FTC complaint, in February 2025, Zillow and Redfin entered into an illegal agreement to dismantle Redfin as a competitor in the ILS advertising market for multifamily rental properties. The timing of this alleged agreement is particularly significant, as it came during a period when both companies were navigating challenging market conditions and evolving their business strategies.
The complaint details the specific terms that allegedly constitute anticompetitive behavior. In exchange for a $100 million payment and other compensation from Zillow, Redfin agreed to end its contracts with advertising customers and help Zillow take over that business, to stop competing in the advertising market for multifamily properties for up to nine years, and to serve merely as an exclusive syndicator of Zillow listings, making Redfin sites effectively a copy of the listings that appear on Zillow’s sites.
The Partnership Disguise
The FTC alleges that the companies attempted to frame their arrangement as a legitimate business partnership rather than what regulators characterize as an anticompetitive agreement. Zillow and Redfin framed their agreement as a “partnership,” but in reality the arrangement is an end run around competition that insulates Zillow from competing head-to-head on the merits with Redfin, the complaint states.
This distinction is crucial to understanding the legal theory behind the lawsuit. While business partnerships and collaborations are common and legal in the marketplace, arrangements that eliminate competition between direct competitors raise significant antitrust concerns under federal law.
The alleged agreement had immediate and dramatic consequences for Redfin’s workforce. In connection with the agreement, Redfin fired hundreds of employees, then helped Zillow to hire its pick of those terminated workers. This workforce transfer further demonstrates, according to regulators, that the arrangement was designed to consolidate rather than genuinely collaborate.
State Attorneys General Join the Fight
The legal pressure intensified when five state attorneys general filed their own lawsuit. The states joining in the lawsuit are Connecticut, Arizona, Washington, Virginia and New York filing the suit in the Eastern District of Virginia. The legal action brought by attorneys general in Arizona, Connecticut, New York, Virginia and Washington state comes a day after the FTC filed its own lawsuit.
The multi-state action demonstrates widespread concern about the alleged anticompetitive arrangement and its potential impact on rental markets across the country. Each of these states represents significant rental housing markets where the actions of dominant online listing platforms can substantially affect both property managers and renters.
Virginia Attorney General Jason Miyares emphasized the potential consumer harm: “This unfair and anticompetitive agreement between listing giants Zillow and Redfin will jack up costs for property managers, who will pass those costs along to renters through higher rents.” This statement articulates the concern that eliminating competition in the advertising market will ultimately harm the very consumers these platforms are supposed to serve.
Market Context and Industry Significance
Zillow Group, Inc., and Zillow, Inc., (Zillow) and Redfin Corporation operate two of the nation’s largest rental ILS networks by traffic and revenue, including sites such as Zillow Rentals, Rent.com, and ApartmentGuide.com. The dominance of these platforms in the rental listing market makes the alleged agreement particularly concerning from an antitrust perspective.
Internet listing services have become essential infrastructure for the American rental housing market. Millions of renters rely on these platforms to search for housing, while property managers and landlords depend on them to reach potential tenants. The concentration of this market in the hands of a few dominant players raises concerns about the potential for anticompetitive behavior.
The rental housing market’s importance to the broader economy amplifies the significance of this case. With homeownership increasingly out of reach for many Americans due to elevated prices and interest rates, rental housing plays a crucial role in providing shelter. Any reduction in competition that leads to higher advertising costs for property managers could ultimately translate to higher rents for tenants.
Alleged Harms to Competition and Consumers
The FTC’s complaint articulates specific harms that the alleged agreement creates in the marketplace. The FTC alleges that the unlawful agreement will likely lead to higher prices and worse terms for multifamily unit advertising and reduce incentives for Zillow and Redfin to compete for renters, including through investment in attracting visitors and innovation to improve user experience when searching on an ILS for a rental property.
These alleged harms operate on multiple levels. Property managers who advertise on these platforms may face higher costs and less favorable terms without Redfin as an independent competitor providing alternatives. Renters may experience degraded search experiences as the platforms have less incentive to innovate and improve their services when competition is reduced.
The elimination of competition also potentially stifles innovation in the internet listing service sector. When companies must compete for both advertiser and user attention, they have strong incentives to develop better features, improve user interfaces, and provide superior customer service. Removing a major competitor from the market reduces these competitive pressures.
Legal Framework and Precedent
The lawsuits invoke multiple legal theories to challenge the alleged arrangement. The FTC alleges that this agreement destroys competition for multifamily rental properties advertising on ILSs, harming both property managers seeking to advertise properties for rent and renters searching for a home. The agreement also constitutes an unlawful acquisition in violation of Section 7 of the Clayton Act, the complaint alleges.
This dual legal approach strengthens the government’s case by attacking the arrangement under different antitrust statutes. The characterization as both an anticompetitive agreement and an unlawful acquisition provides multiple paths for establishing violations of antitrust law.
FTC Bureau of Competition Director Daniel Guarnera emphasized the straightforward nature of the alleged violation: “Paying off a competitor to stop competing against you is a violation of federal antitrust laws. 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.”
Requested Remedies and Potential Outcomes
The FTC and state attorneys general are seeking substantial remedies to address the alleged anticompetitive conduct. The complaint seeks to stop Zillow and Redfin from continuing their unlawful agreement and contemplates a potential divestiture of assets or the reconstruction of businesses to restore competition.
These requested remedies could fundamentally reshape the business relationship between Zillow and Redfin. Unwinding the agreement would require Redfin to re-establish itself as an independent competitor in the multifamily rental advertising market, potentially rehiring terminated employees or rebuilding capabilities that were allegedly transferred to Zillow.
Divestiture remedies could be particularly complex given that the agreement allegedly involved not just contractual arrangements but also workforce transfers and business integration. Restoring genuine competition may require more than simply terminating contracts, it might necessitate reconstructing Redfin’s competitive capabilities in the rental listing market.
Company Responses and Defenses
While the lawsuits detail extensive allegations, both companies have opportunities to present their defenses and challenge the government’s characterization of their arrangement. Companies frequently argue that business combinations and partnerships that appear anticompetitive actually create efficiencies or consumer benefits that outweigh any competitive concerns.
The companies might argue that their arrangement was a legitimate business partnership designed to serve consumers more effectively, reduce redundant operations, or create synergies that benefit users of their platforms. They may also challenge the government’s market definition or the assertion that the arrangement substantially reduces competition.
Broader Implications for Real Estate Technology
This lawsuit could have significant implications for the real estate technology sector beyond the immediate parties. Other platforms and technology companies in the real estate space will likely scrutinize their competitive arrangements more carefully given the aggressive stance regulators are taking toward agreements between major platforms.
The case also highlights increased regulatory attention to digital platforms and marketplaces that have achieved dominant positions in their sectors. As a few large platforms increasingly control access to essential services like housing searches, regulators are showing greater willingness to challenge arrangements that may reduce competition.
Impact on Rental Housing Markets
The ultimate impact on rental housing markets will depend on the outcome of the litigation. If the government prevails and competition is restored, property managers might benefit from having genuine alternatives for advertising their properties, potentially leading to better terms and lower costs.
Renters could benefit from renewed competition between platforms seeking to attract users, potentially resulting in improved search features, better user experiences, and more comprehensive listings. However, these benefits would only materialize if the courts agree with the government’s allegations and order effective remedies.
Procedural Next Steps
The Commission vote to authorize staff to file a complaint in the U.S. District Court for the Eastern District of Virginia was 3-0, demonstrating unanimous support among FTC commissioners for the action. The case will now proceed through federal court, with both sides presenting evidence and legal arguments.
The litigation process could take months or years to resolve, depending on whether the case goes to trial or is resolved through settlement. Throughout this investigation, the FTC worked in close collaboration with the offices of several state attorneys general, and this cooperation is expected to continue throughout the litigation.
The coordinated legal action by the FTC and five state attorneys general against Zillow and Redfin represents a significant moment in antitrust enforcement within the real estate technology sector. The allegation that Zillow paid Redfin $100 million to eliminate competition in the rental listing market, if proven, would constitute a clear violation of antitrust laws designed to protect consumers and competition.
As the litigation unfolds, the case will test how antitrust principles apply to digital platforms that have become essential infrastructure for major sectors of the economy like rental housing. The outcome could establish important precedents for how dominant online platforms can and cannot structure their competitive relationships, with implications extending far beyond real estate into other sectors dominated by digital marketplaces and listing services.
For millions of Americans searching for rental housing and the property managers who advertise on these platforms, the resolution of this case could significantly affect both the cost and quality of services they receive from online listing platforms that have become indispensable tools in the modern housing market.
