Arizona attorney general joins FTC lawsuit against Redfin and Zillow over rental listings partnership

By: Rick Morgan

The Federal Trade Commission on Tuesday filed a lawsuit against Seattle-based online real estate companies Redfin and Zillow Group Inc. (Nasdaq: ZG), and Arizona Attorney General Kris Mayes joined in the complaint.

The lawsuit, filed in federal court in Virginia, alleges the two companies' February partnership on rental listings violates antitrust law. The partnership made Zillow the exclusive provider of rental listings for properties with at least 25 units on Redfin and its affiliate sites. Zillow paid Redfin $100 million upfront for the partnership, plus a fee per lead delivered.

“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," Daniel Guarnera, director of the FTC's Bureau of Competition, said in a news release.

Arizona's Mayes said she joined the complaint along with the attorneys general of California, Connecticut, New York, Virginia, and Washington.

“Arizonans are already facing an astronomical cost of living – and now these massive companies want to create an unfair advantage in the market which will allow them to skyrocket costs for landlords, who will use it as an excuse to charge even more money for rent,” Mayes said in a statement. “We can’t just sit by and allow costs to go up and up and up.”

According to the complaint, Redfin terminated its existing multifamily advertising contracts and moved those customers over to Zillow, and as a result Redfin will now host only a copy of Zillow's listings. The lawsuit alleges this is "an end run around competition," as Redfin has now stopped competing with Zillow on multifamily rental properties, and that renters and rental advertisers will suffer.

Redfin in February disclosed it would lay off about 450 employees from its rentals business tied to the partnership. The lawsuit alleges Redfin helped Zillow hire the laid-off employees.

At the time of the partnership announcement, Zillow and Redfin said the move would expand the reach of properties listed through Zillow while giving Redfin's platform more rental listings.

In an emailed statement, a Redfin spokesperson said the company disagrees with the FTC, and the company "is confident we will be vindicated by a court of law."

"Our partnership with Zillow has given Redfin.com visitors access to more rental listings and our advertising customers access to more renters," the spokesperson added. "By the end of 2024, it was clear that the existing number of Redfin advertising customers couldn’t justify the cost of maintaining our rentals sales force. Partnering with Zillow cut those costs and enabled us to invest more in rental-search innovations on Redfin.com, directly benefiting apartment seekers."

Redfin, which launched in 2006, offers brokered listings, a home search tool, mortgages and a service for high-end homes called Redfin Premier. The company started listing rentals in 2022 after it acquired Atlanta-based RentPath in 2021 for $608 million.

In July, Detroit-based mortgage and fintech heavyweight Rocket Cos. Inc. acquired Redfin for $1.75 billion.

A Zillow spokesperson in an emailed statement echoed Redfin's sentiment that the partnership benefits renters and property managers.

"It 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 a home," the Zillow spokesperson added. "We remain confident in this partnership and the enhanced value it has delivered and will continue to deliver to consumers."

Zillow, founded in 2004, offers a home and rental search tool, mortgages and a platform for partner agents called Premier Agent. The company generated $655 million in revenue during the second quarter, up 15% year over year. Zillow has nearly 1,700 Seattle-area employees, making the company one of the region's largest tech employers.

Tuesday's lawsuit from the FTC is the latest in a string of lawsuits facing Zillow, including a class-action lawsuit filed in September that alleges Zillow's Flex referral program tricks homebuyers into overpaying for homes by directing them to agents who have to pay a 40% fee on their commission to Zillow. Zillow is facing a lawsuit from CoStar Group Inc. for allegedly using CoStar-copyrighted photographs, and it is facing a lawsuit from Compass Inc. that claims Zillow's policy against private listings violates antitrust law.

Final Thoughts:
The FTC’s lawsuit against Zillow and Redfin, joined by Arizona AG Kris Mayes, highlights growing concerns over competition in the rental listings market. By consolidating multifamily rental ads under Zillow, regulators argue the partnership reduces competition, increases costs for landlords, and ultimately risks higher rents for tenants. With antitrust scrutiny intensifying, the outcome of this case could reshape how rental listings are controlled and accessed nationwide.