By Jonathan Stempel
(Reuters) -Zillow Group and Redfin were sued on Wednesday by five U.S. states for allegedly conspiring to thwart competition in online rental listings, including when Zillow paid Redfin $100 million to stop running apartment ads.
Attorneys general of Virginia, Arizona, Connecticut, New York and Washington filed their antitrust lawsuit in the Alexandria, Virginia federal court. The U.S. Federal Trade Commission filed a similar lawsuit there on Tuesday.
Both cases stemmed from a February
agreement between Zillow and Redfin, which together with Apartments.com owner CoStar account for most revenue from U.S. online rental ads.
In exchange for the $100 million, Redfin allegedly agreed to end advertising contracts with managers of larger apartment buildings, stay out of that market for nine years, and display on its platform only rentals that Zillow also displays.
The attorneys general said this would lead to higher prices and worse terms for advertisers, and harm renters by reducing incentives to compete for them. New York Attorney General Letitia James said renters could also face higher prices.
Renters occupy nearly 49 million units in the United States, or more than 30% of all housing nationwide, the complaint said.
"Zillow paying Redfin to exit the market harms renters and property owners by taking away free market incentives to provide high-quality services that businesses and consumers rely on," Virginia Attorney General Jason Miyares said in a statement.
Zillow and Redfin repeated their separate statements from Tuesday that their agreement gives property managers and advertisers access to more renters, and benefits renters by providing access to more listings.
Redfin added it was confident it would prevail in court.
Rocket Cos, which owns Rocket Mortgage, bought Redfin on July 1.
Zillow, based in Seattle, is also defending against a lawsuit by Compass, the largest U.S. residential real estate brokerage by sales volume, claiming it tried to monopolize private home listings.
The case is Virginia et al v Zillow Group Inc et al, U.S. District Court, Eastern District of Virginia, No. 25-01647.
(Reporting by Jonathan Stempel in New YorkEditing by Bill Berkrot)
