FTC Challenges Zillow and Redfin Over Alleged Anticompetitive Agreement

What's Happening?

The Federal Trade Commission (FTC) has initiated legal action against Zillow and Redfin, accusing them of entering into an unlawful agreement that suppresses competition in the rental advertising market. The complaint, filed in the U.S. District Court for the Eastern District of Virginia, alleges that Zillow paid Redfin $100 million to dismantle Redfin as a competitor in the multifamily rental properties advertising market. As part of the agreement, Redfin agreed to terminate its contracts with advertising customers and assist Zillow in acquiring that business, effectively making Redfin's sites a copy of Zillow's listings. The FTC argues that this arrangement violates federal antitrust laws and harms both property managers and renters.

Why It's Important?

The FTC's lawsuit is significant as it addresses concerns about competition in the rental advertising market, which is vital for renters and property managers. The alleged agreement between Zillow and Redfin could lead to higher prices and reduced choices for consumers, impacting the overall health of the U.S. housing market. The FTC's action emphasizes the need for competitive markets to ensure fair pricing and innovation. A favorable ruling for the FTC could lead to changes in how rental listings are managed online, potentially restoring competition and benefiting consumers.

What's Next?

The FTC's complaint seeks to stop Zillow and Redfin from continuing their alleged anticompetitive conduct and contemplates potential divestiture of assets or restructuring of businesses to restore competition. The case will be decided by the court, and the outcome could have significant implications for the rental listings industry, potentially affecting how companies like Zillow and Redfin operate and compete in the future.