FTC Sues Zillow & Redfin over $100M Deal to Halt Rental Advertising Competition

Zillow, Redfin, and the $100 Million Antitrust Firestorm

Date: September 30, 2025
Headline: FTC Sues Zillow & Redfin over $100M Deal to Halt Rental Advertising Competition

The Allegations: What’s the FTC Claiming?

On September 30, 2025, the U.S. Federal Trade Commission filed a complaint in the U.S. District Court for the Eastern District of Virginia against Zillow, Redfin, and related entities. The core allegation is that Zillow paid Redfin $100 million (plus additional compensation) to cease competing in the multifamily rental advertising market, thereby subverting competition in the online rental listing space. Federal Trade Commission+2Inman+2

Here are the specific terms the FTC claims were part of the illicit pact:

• Redfin agreed to terminate its contracts with advertising customers in the multifamily rental (i.e. apartment building) space. Federal Trade Commission+2Bloomberg Law News+2

• Redfin would stop competing in that advertising market for up to nine years. Federal Trade Commission+2Bloomberg Law News+2

• Redfin would act as a syndicator of Zillow’s listings (i.e. Redfin’s rental listings would effectively mirror Zillow’s). Federal Trade Commission+2Inman+2

• In connection with this agreement, Redfin allegedly laid off hundreds of employees and then assisted Zillow in hiring selected former employees. Inman+3Federal Trade Commission+3Bloomberg Law News+3

The complaint frames this deal not as a benign “partnership,” but as a strategy to “eliminate Redfin as an independent competitor.” RealEstateNews.com+3Federal Trade Commission+3Bloomberg Law News+3

According to the FTC, this arrangement violates the Sherman Act, the Clayton Act, and the FTC Act. Federal Trade Commission

Why the FTC Sees It as Problematic

The FTC argues the deal harms competition in a market that is already concentrated and critical to renters, property managers, and apartment owners:

• Less competition → higher costs: Eliminating a major competitor could lead to increased prices, less favorable advertising terms, or reduced innovation in the ILS (Internet Listing Services) space. Federal Trade Commission+2Inman+2

• Reduced incentives: With Redfin out of the active competition game, Zillow’s motivation to improve features, data, or user experience for renters or property managers could diminish. Federal Trade Commission+1

• Market consolidation: The deal effectively gives Zillow exclusive access to Redfin’s audience (for rentals), making Redfin’s rental offerings redundant. Inman+2Federal Trade Commission+2

The FTC seeks to halt the agreement altogether and is open to remedial measures such as divestiture or restructuring to restore competitive balance. Federal Trade Commission+1

What’s at Stake (and What Zillow / Redfin Could Say)

For Zillow & Redfin

• Defense arguments might include claiming the agreement is a form of “efficiency” partnership—that combining forces improves service or reduces duplication. But when a payment is used to shut down competition, that rationale is often weak in antitrust law.

• Zillow and Redfin will likely contest whether the agreement can or should be characterized as a valid business combination or legitimate collaboration, rather than a de facto monopoly-protection scheme.

• They’ll also challenge the FTC’s assessment of market definition (i.e. how “rental advertising ILS” is defined) and whether competition would truly be harmed.

For the Market & Consumers

• Smaller ILS platforms or new entrants may find it tougher to compete if Zillow gains dominant control of the multifamily rental ad pipeline.

• Property managers and landlords may see less bargaining power or face higher costs for placing rental ads.

• Renters may see fewer choices, slower innovation in search tools, or reduced information transparency.

For Investors

• The stock market reacted swiftly: Zillow’s shares dropped (by about 8% in one report) after the FTC lawsuit became public. Investing.com Canada+1

• Rocket Companies (parent to Redfin) also saw declines. Investing.com Canada

• Legal and restructuring costs could be substantial, and this case may drag on for months or years.

What Happens Next?

1. Preliminary motions & hearings: Zillow and Redfin will probably file motions to dismiss or limit claims. The court will hold proceedings to decide whether the FTC’s case can move forward.

2. Discovery & evidence: The FTC must prove the deal’s anticompetitive effects; Zillow/Redfin will present counterevidence, testimony, internal communications, and expert analyses.

3. Potential remedies: If the court rules for the FTC (or if the parties settle), possible remedies include:

   • Requiring Zillow and Redfin to unwind parts of the agreement

   • Forcing Redfin to resume competing in multifamily ad space

   • Divesting assets or restructuring the relationship

   • Injunctions to prevent future anti-competitive collaboration

4. Appeals and long litigation: Antitrust battles often persist through appeals and are closely watched for broader precedent.

Broader Implications & Context

• This case may set a new benchmark for how aggressive platforms can be in “buying out” competition.

• It underscores growing regulatory scrutiny on Big Tech, platforms, and online marketplaces that consolidate power via acquisition or strategic deals.

• For real estate tech, it signals that regulators are watching how data control, syndication, and listing networks are used not just to compete but to exclude.

• Zillow already has been under legal attention for other fronts (e.g. copyright claims, disputes over listing policies). Reuters+1