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Attorneys General Sue Zillow and Redfin Over Alleged Anti-Competitive Practices in Rental Market
A coalition of attorneys general from five states – New York, Virginia, Arizona, Connecticut, and Washington – filed a lawsuit Wednesday against online real estate giants Redfin and Zillow. The suit alleges the two companies conspired to stifle competition in the online housing rental market, potentially harming both advertisers and renters.
The legal action follows a similar complaint filed earlier this week by the Federal Trade Commission (FTC).
According to officials, the lawsuit centers on a February deal where Zillow reportedly paid Redfin $100 million. The agreement allegedly involved Redfin shutting down its apartment rental advertising business and transferring its existing clients to Zillow.
“This agreement is nothing more than an end run around competition that insulates Zillow from head-to-head competition on the merits with Redfin for customers advertising multifamily buildings,” the lawsuit states.
The attorneys general claim these agreements violate federal antitrust laws, warning they could lead to increased costs for advertisers and fewer rental options for those searching for housing. New York Attorney General Letitia James highlighted the potential impact on residents.
“Millions of New Yorkers rely on online apartment listings to find an affordable and safe place to live,” James said in a statement. “Zillow’s attempt to shut down its competition could drive up costs for advertisers and leave renters with fewer options when searching for a new apartment.”
James’ office noted that Zillow, Redfin, and CoStar (owner of Apartments.com) collectively dominate the market, accounting for an estimated 85% of all online rental market revenue.
The lawsuit seeks an injunction to prevent the companies from continuing their alleged anti-competitive schemes and proposes a potential restructuring of their businesses to foster greater market competition.
Both companies have issued statements denying the allegations. A Redfin spokesperson asserted, “Redfin strongly disagrees with the allegations and is confident we will be vindicated by a court of law.”
The company added that its partnership with Zillow has expanded access to listings for Redfin.com visitors and provided more renters to its advertising customers. Redfin stated that the decision to partner with Zillow was made because the existing number of Redfin advertising customers could not justify the cost of maintaining its rentals sales force by the end of 2024, allowing them to invest more in rental-search innovations.
A Zillow spokesperson maintained that the company’s partnership with Redfin 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.”
Both Redfin and Zillow also expressed disagreement with the FTC’s similar complaint, reiterating their confidence in their partnership.