Zillow and Redfin Sued by FTC for Alleged Suppression of Rental Advertising Competition

Zillow and Redfin have been sued by the Federal Trade Commission (FTC) for making an illegal agreement to suppress rental advertising competition in the United States.

The FTC alleges that Zillow and syndication partner Redfin (which publishes Zillow's rental listings on its portal) have stunted multifamily rental advertising competition, harming American renters and property managers.

The FTC says Zillow made an illegal agreement with Redfin, designed to effectively eliminate Redfin as a competitor to Zillow, in exchange for a $100 million payment.

The lawsuit alleges that the payment included clauses that saw Redfin end contracts with advertising partners so Zillow could take them; to stop competing in the advertising market for up to nine years; and to serve as an exclusive syndicator of Zillow listings, effectively turning Redfin into a duplicate of Zillow and breaching antitrust laws.

The FTC says the unlawful agreement will lead to higher prices and worse terms for multifamily unit advertising, and reduce incentives for Zillow and Redfin to compete for renters. 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.

Daniel Guarnera, Director of the Bureau of Competition at the FTC, said:

"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.

"The FTC will do our part to ensure that Americans who are looking for safe, affordable rentals receive all the benedits of robust competition between internal listings services like Zillow and Redfin."

This latest legal bombshell marks the fourth major lawsuit to land on Zillow's doorstep in virtually as many months, while Redfin is also indirectly attached to Zillow's copyright infringement case brought by CoStar.