FTC Lawsuit Accuses Zillow of Diminishing Competition with Redfin

Claims of Reduced Choices for Renters and Advertisers

The Federal Trade Commission (FTC) has taken legal action against Zillow, alleging that the real estate search giant paid $100 million to its competitor Redfin. The claim centers on a February deal whereby Redfin supposedly became the exclusive distributor of Zillow's listings, thereby weakening competition.

According to allegations, Redfin shifted from generating its own listings to largely replicating those from Zillow. This move reportedly awarded Zillow greater influence over the market. Additionally, the suit claims that Redfin agreed to terminate agreements with advertisers, providing Zillow even more market dominance.

The FTC foresees this alleged anticompetitive behavior leading to surging prices and unfavorable conditions for both renters and those purchasing advertising space. The lawsuit articulated, “This agreement sidesteps head-to-head competition, shielding Zillow from direct competition with Redfin in marketing multi-unit properties.”

In its defense, Zillow labeled its collaboration with Redfin as beneficial to both the market and consumers, arguing that the shared listing services extended access to apartment listings for renters and property managers beyond isolated platforms.

Redfin countered the FTC's complaints by expressing that by the end of 2024, the company realized the expense of maintaining its existing rental sales operations was unsustainable due to an insufficient customer base. They claimed that aligning with Zillow permitted cost savings, thus allowing for further advancements in their rental search capabilities, which advantageously impacts those seeking apartments.

Further Allegations and Consequences

Moreover, the FTC contends that Redfin laid off a significant number of employees as a result of the agreement, with Zillow absorbing some of these workers into its operations. Essentially, the agency purports that Zillow has effectively taken over a substantial portion of Redfin's operations, all under the guise of a partnership to deflect regulatory oversight. As a resolution, the FTC is urging the court to dissolve this arrangement and explore asset divestiture possibilities.

This is not Zillow’s sole legal issue at the moment. Earlier in June, a real estate firm known as Compass filed its own lawsuit against Zillow, accusing them of suppressing fair competition.