FTC Sues Zillow Over $100 Million Redfin Deal
▼ Summary
– The FTC is suing Zillow and Redfin over a February partnership that allegedly violates antitrust laws by eliminating Redfin as a competitor.
– Under the deal, Zillow paid Redfin to syndicate rental ads, causing identical listings to appear across Zillow, Trulia, and Rent.com platforms.
– Redfin agreed to end its advertising contracts, transfer customers to Zillow, and not compete for multifamily property listings for up to nine years.
– The FTC claims Redfin laid off hundreds of workers and helped Zillow hire selected employees, effectively acquiring part of Redfin’s business under a “partnership” guise.
– Zillow now controls most online rental listings for larger complexes through its sites and partnerships, potentially raising costs for landlords and limiting renter options.
A recent partnership between real estate titans Zillow and Redfin has drawn a major lawsuit from the Federal Trade Commission, which alleges the arrangement illegally stifled competition in the online rental market. The agency claims the deal effectively eliminated Redfin as a rival, potentially reducing choices for renters and increasing costs for property owners.
The FTC’s complaint centers on a February agreement where Zillow paid Redfin approximately $100 million to syndicate its rental advertisements. This meant that whether someone visited Zillow, Trulia, or Rent.com, they would frequently encounter identical apartment listings. The partnership consolidated the online rental search experience across several major platforms.
Crucially, the FTC asserts that Redfin agreed to terminate its existing advertising contracts with clients, transferring them over to Zillow. The complaint further states that Redfin consented not to compete with Zillow for multifamily property listings for a period of up to nine years. The FTC’s Director of the Bureau of Competition labeled this a clear violation of federal antitrust law, characterizing it as a payoff to a competitor to cease competitive activities.
The lawsuit also contends that the arrangement led to Redfin laying off hundreds of employees, after which Zillow was able to selectively hire the workers it wanted. This detail suggests to regulators that Zillow was effectively acquiring a segment of Redfin’s business while attempting to disguise the transaction as a simple partnership to avoid antitrust review.
When considering Zillow’s own portfolio of sites, the properties it gained from Redfin, and its newer partnership with Realtor.com, the company now wields significant control over the majority of online rental listings for large apartment complexes. This market consolidation could result in higher advertising fees for landlords and make it more difficult for tenants to discover rental properties outside of Zillow’s extensive advertising network. Zillow has not yet issued a public statement regarding the lawsuit.
(Source: The Verge)
