FTC Files Antitrust Lawsuit Against Zillow and Redfin Over $100M Rental Deal
In a high-stakes legal battle, the Federal Trade Commission (FTC) has filed an antitrust lawsuit against Zillow Group Inc. and Redfin Corp., alleging the two real estate companies struck a deal that undermines competition in the online rental advertising market. The lawsuit, unveiled on Tuesday, claims that a $100 million agreement between the companies from February 2025 improperly eliminated Redfin as a competitor and consolidated Zillow’s dominance in the multifamily rental advertising sector.
Allegations of Anti-Competitive Behavior
According to the FTC’s complaint, the agreement required Redfin to outsource its multifamily rental listings business to Zillow, effectively redirecting rental traffic from Redfin’s platform to Zillow’s. This partnership, described by the companies as a strategic collaboration aimed at enhancing user experience, is now under fire for allegedly being an illegal non-compete arrangement. Regulators say the deal restricts consumer choice and could raise advertising costs for landlords, which might ultimately impact renters.
"Such agreements undermine fair competition, potentially leading to higher costs for renters amid an already strained housing market", said FTC Chair Lina Khan in a statement. The agency is seeking to unwind the agreement and implement measures to restore competition in the digital real estate market.
Market Control and Internal Communications
The FTC’s complaint highlights the increasingly concentrated nature of the online rental sector, where platforms like Zillow have a substantial share of advertising revenue related to apartment listings. As noted in the filing, internal communications from Zillow executives described the $100 million payment to Redfin as a way to "eliminate" competition, securing a larger share of the market for paid landlord promotions.
Prior to the agreement, Redfin had been actively developing its rental listings capabilities. Critics allege the company’s decision to abandon its independent operations in this space, as part of the deal with Zillow, harmed both innovation and competition. Consumer advocacy groups have drawn parallels to other antitrust cases in the real estate tech sector, such as recent Department of Justice actions against RealPage, a rental software firm accused of price-fixing.
Stock Market Reactions and Company Responses
The announcement of the lawsuit sent shockwaves through financial markets, with Zillow’s stock dipping over 5% in after-hours trading. Investors appear concerned about the legal risks tied to the Biden administration’s aggressive approach to antitrust enforcement in technology-adjacent industries.
In a blog post, Redfin CEO Glenn Kelman defended the deal, arguing it allowed the company to focus on its core business of home-buying services while leveraging Zillow’s rental inventory. However, this justification has done little to quell criticism. Consumer advocates worry the partnership amounts to a monopolistic maneuver, enabling Zillow to tighten its grip on the rental advertising market.
Broader Implications for the Real Estate Tech Sector
The lawsuit is the latest in a series of government actions targeting the real estate technology industry. Last year, a jury found several brokerages linked to Zillow and Redfin guilty of conspiring to keep commissions high, an outcome that increased scrutiny on competitive practices within the sector. The FTC’s current case builds on this momentum, with regulators aiming to deter similar arrangements in concentrated markets.
Experts have noted that the structure of the Zillow-Redfin agreement - framed as a licensing arrangement - may have been designed to circumvent antitrust laws. However, the FTC’s complaint claims the deal’s true intent is evident in internal company documents discussing market share domination.
Possible Outcomes and Industry Disruption
If the FTC succeeds, the case could set a precedent for regulating collaboration between digital platforms in the real estate market and beyond. Analysts suggest the fallout could include forced divestitures or significant changes to Zillow’s business model. Some within the real estate industry have expressed concerns that unwinding the deal might disrupt rental search functionality for users and force Redfin to rebuild its rental listings infrastructure from scratch.
Meanwhile, the FTC argues that breaking up such agreements could spur innovation and foster greater competition among smaller players in the rental advertising market. As one Bloomberg analyst noted, the case reflects a broader government effort to dilute the power held by dominant platforms in housing technology.
Both Zillow and Redfin have vowed to fight the FTC’s allegations, with Zillow claiming in a statement that the partnership "enhances efficiency without harming competition." Initial court hearings are expected to begin in early 2026, with the industry closely watching for the lawsuit’s implications as regulatory scrutiny intensifies.